The future of natural gas cost

Christian Egli_2

The scare for high priced natural gas might seem over - for now - and it may be all back to running heating systems as carefree as usual. Highly complex boilers and furnaces might loose some of their financial silver lining, until the next spike.

One thing not going away ever is volatility; with that in mind perhaps the central heating system of the future (as in now) might involve larger fuel oil and propane storage tanks. A stash sufficient for one, two or even five years would do great good in reducing the pain during temporary cost spikes.

Also, multi fuel mode, gas, oil, coal, electric, bio, wood, etc... seems ever more attractive. Energy independence starts first with energy independence from your utilities and fuel suppliers.

You can also buy options on the futures market; you can even hedge on the weather market at the Chicago Mercantile Exchange... and not deal with pipes and boilers at all.

Here is a link to an interesting article with further links within it.

http://www.electricalcontractor.com/

Same link

PS: My local natural gas supplier hasn't yet passed on the reduced price, meanwhile all the gas stations around here in Ohio are tripping over themselves to lower lows ever: $2.03 per gallon :)

The open competitive capitalist market works much better than the central command monopoly utilities.

Leo

It's all a game

I was speaking to a customer the other day who has a brother that is a heavy hitter with one of the big names on the stock exchange. He said his brother told him the rainy Labor Day weekend dropped the anticipated consumption of gasoline which in turn has dropped the price. He also said it will go back up. Now, if the American consumer used less for non essential driving for one month it would send a message to the big fuel companies. BUT, so many Americans cry and whine and feel the "government" should take care of them that things won't change overnight.

Leo

Christian Egli_2

It's 70 F outside and sunny

When speculators drive the prices of commodities to such risky heights it only is to be expected a little rain will send them into a scare -limit your loss- sell off panic. The same happens when a new prospective oil well is discovered or when new technology inches itself towards promising results. And... it all happens in reverse when Mahmoud of Iran promises such lunacies that will disrupt market flow.

Predictability and steadiness are what is of real value in business. Well worth the risk, effort and money to maintain.

My Ohio weather is a mystery, every day; and so it is still a fascinating daily topic of conversation. Particularly since we can't do a thing about predicting it. Ask the TV weather man.

Your comments make sense, Leo. Thanks.

Perry_2

Sorry to say this.. but that info is bogus.

The cost of natural gas is fairly well tied to the worldwide price of crude oil.

The price of gasoline is very well tied to the pirce of crude oil.

If you go about 1/2 down on the following page to the "12 Previous months" you will see why the price of gasoline (and natural gas) has dropped from a while ago

www.oilnergy.com/1opost.htm

The US oil companies do not control the the price of crude oil - nor does the US.

What China and India does has the largest impact these days on crude oil prices; and all indications are that in general that the price will continue to climb.

The "large" US oil find in the Gulf of Mexico will have miminal affect, if any, on prices in the US as it represents only about 6% of US consumption at this time; and it will probably take about 10 years to bring fully online - which will help ofset some of the other declining US oil production.

As a percentage of gross sales - the US Oil companies "profit" is very low - as a percentage basis (and most of you heating contractors would not operate your business at those margins). The profits seem large only because of how huge the energy markets are. Also, there have been almost 30 investigations in the past 30 years on "excess profits" and "oil company gouging" and no evidence of this was ever found. The profit factor for the oil companies in a gallon of gas is on the order of 1/10 of a cent (or less).

In reality - its all political garbage that sounds good but has no basis in fact.

As far as the future price of natural gas - and gasoline and fuel oil. UP some, up more, and up a lot are the only treands I see in the next 10 and continuing years.

There may be short term ups and downs - but the general trend is up - and up a lot on a percentage basis for years to come. The reason is a combination of reduced output from much of the worlds oil and gas fields combined with increasing demand from developing nations becoming industrilized. India and China are increasingly gobbling a lot of oil and gas as they try to match the western world in modern conviences - and they have many times the population. The US is and will be a minority player from here on.

All the US oil companies can do - all any of us can do - is figure out how to ride the ups and downs and still make a reasonble profit on our business - or live within out budget for us homeowners.

Perry

Wayco Wayne_2

Question

a little off the subject, but not too far. I've been watching Deisel fuel prices since I'm considering a Sprinter sometime in the near future. With gas going up and down Deisel is sometimes more expensive, and sometimes cheaper. Right now here in MD it's 25 cents per gallon more expensive. Why does it ride it's prices differently from Gasoline??? WW

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Perry_2

My understanding is

that it is an inventory lag situation.

Gasoline tends to more quickly move to the refiners daily prices; and diesel fuel takes longer.

If you were to look at the price the refinery is selling the fuel products for (their current production price) you would see them pretty much in step with each other.

Perry

ALH_4

Energy

I could not agree more.

Energy will trend upward from here forward. Drops in price will be short-lived. Demand throughout the world is quickly increasing, and therefore cheap energy is a thing of the past. In my opinion, we have not even begun to see how high prices will be in the near future.

-Andrew

Christian Egli_2

Retraction

Here is the story I wanted to pass on, what the ele-blog is doing in my first link, I don't know. (Though it is one of the further links among other better ones)

I had just read the paper EnergyUserNews magazine with the article in question and following links to more detailed analysis. I tired passing it on electronically and I am very sorry for failing to turn in my links in blue.

I'm all red in the face.

http://www.energyandpowermanagement.com/CDA/Articles/Column/61fafd21c956d010VgnVCM100000f932a8c0____

This magazine is about utilities which sell their stuff via public utilities commissions which have all sorts of indirect ways of fiddling with market prices set on the commodities exchange. My paid for at the bill natural gas rate has not gone down (yet and just a few years back, gas was cheaper to buy than oil was, now it's the reverse. Today, gas is even very close to electric costs... which only means electricity will go up soon. While not 8 years ago, my natural gas was about ten times the price of electricity, on a per energy value. Amazing fluctuations neither of which all seem that well linked together.

Energy as a whole follows inflation and goes up in time like everything else. Gasoline, today, is not at abnormally high prices compared to milk, bread, wages, and all the things in the cost of life. To me, it is not the crisis as portrayed on TV - there haven't been shortages either. Natural gas is more of a crisis.

Slow, steady, moderate inflation is the best thing we can hope for the economy. Inversely, any long term price drop is a terrible deflation where wages shrink and investments don't look that good either. It's nothing to be wished on anyone or anything, not even the price of gasoline.

Of course, with deflation, I can buy things cheap, but will I? Simply imagine if I can wait until next year to have my new boiler installed and have it all for a lesser cost? What would all the HVAC companies do this year? Probably rush to the bottom and crash.

Sort term up and down price spikes, and whimsical volatility, is another thing all together. To smooth out this ride, have tow cars, one Diesel and one gasoline, and switch between the two at will, short term market slick tricks won't get to grab you.

And oh, gasoline is back to $2.21 this afternoon, this morning it was $1.98. Slick stuff. The weather, yesterday, unseasonably hot, tomorrow unseasonably cold. Go figure.

Sorry again for my embarrassing mix up and thanks for all you posts.

Perry_2

Appolgy accepted.

I have studied the energy markets for years - and I have insider access to a lot of things.

If you are interested here's a great link to a general site with lots of good information in the public area (more details to paid subscribers; and most paid subscibers only subscibe to one or two of the areas).

www.platts.com

Here is a really interesting professional run blog on nuclear energy that often touches on issues with natural gas and other forms of energy (page throught the past pages). Information is highly credible and very much fact based when they provide cost and other numbers - although some people disagree with the policies advocated.

You will need to copy, cut and past, the entier line to get to this. It is normally accessed through a restricted site - but the blog itself is not restricted.

http://neinuclearnotes.blogspot.com/



Perry