Richard Ha writes:
From the Wall Street Journal on Thursday, some concern over the price and availability of natural gas:
Natural Gas Makes Biggest Gain in Two Months
Concern Over Low Stockpile Lifts Market
By Timothy Puko
Natural-gas prices on Thursday posted their biggest one-day gain in two months after a smaller-than-expected increase in U.S. inventories reignited fears that supplies are too low.
Producers added 24 billion cubic feet to stockpiles in the week ended April 11, less than the 34 billion cubic feet average forecast by analysts and traders in a Wall Street Journal survey. Gas supplies are coming off an 11-year-low after a frigid winter boosted demand to burn it for home heating…. Read the rest
The big picture is this: natural gas is pumped underground during the summer, when production is high, and then pulled out of the ground and used in the winters. Because this past winter on the mainland was exceptionally cold, natural gas stores were drawn down much more than is normal or was anticipated.
Now that we’re in the season when we pump natural gas back into storage, there might not be enough to take care of next winter without the price escalating significantly.
The Wall Street Journal article above notes a spike in natural gas futures as people realize that not much gas is going back into underground storage to compensate for this past cold spell. Stock traders are saying, “Holy smoke!”
This is one of the reasons I’m pushing so hard for geothermal – so that we can get off this treadmill.
I was just talking to Robert Rapier, who is saying the same thing. He said that a mild winter might not have caused this mid-$4/1000 cubic feet price to seem normal. He wrote about this last month at Energy Trends Insider:
Gas Inventories Reach 11-Year Low
By Robert Rapier on March 13, 2014 with 7 responses
Natural Gas Update
Two weeks ago I wrote about the abnormal situation with natural gas inventories in Natural Gas Inventories are Headed Toward Zero. I got a number of questions and comments about that essay, and since then we now have another two weeks of inventory data, let’s update the picture….Read the rest
The question people are asking now is: What happens if we cannot refill the underground natural gas storage fast enough, and before winter rolls around again. And what if it happens to be exceptionally cold again?
Stay tuned.