‘Abundant’ Gas ‘Ensures Less Price Volatility’? Today’s natural gas price volatility - arriving months before winter - raises new questions about risks associated with allowing the unpredictably priced fuel to play a growing role in the nation’s energy mix. markets, a growing number of outside observers warned that fracking looked financially unstable and that spending was outpacing earnings by too large a margin. and politicians promised an era of American “ energy dominance.” The shale rush rapidly expanded into oil, the fossil fuel used to make gasoline (gasoline is the “gas” you use to fuel your car - which, confusingly, is an entirely different thing from natural gas, an odorless, colorless, lighter-than-air fuel that can be burned in homes for heat and at power plants to make electricity.)īut while an extraordinary amount of both oil and gas unleashed by fracking flooded U.S. In the U.S., the past decade was marked by a shale gas production glut that was perhaps dwarfed only by the industry’s own hype, as leading executives gushed over “ two Saudia Arabias of gas” in the U.S. Ketan Joshi SeptemEuropean natural gas prices skyrocketed in the autumn of 2021, drawing a comparison to the similarly shaped graphs of greenhouse gas levels (in ppm) surging over the past century. These gas price spike charts look like ppm concentrations…. The reality too is that natural gas has long suffered from wild price swings and volatility that - while tamped down in the recent past by the shale gas glut - just might be re-emerging into a pandemic-pressured world. “Recent increases in global natural gas prices are the result of multiple factors,” IEA Executive Director Fatih Birol said in a September 21 statement, “and it is inaccurate and misleading to lay the responsibility at the door of the clean energy transition.” It’s disconnected from reality, a reality that’s playing out right now in Europe,” a September 29 American Petroleum Institute post reads.Īttempts to pin the blame for natural gas price swings on renewables drew immediate pushback from the International Energy Agency (IEA). ![]() energy portfolio, heavily relying on come-and-go energies, is unwise, bordering on foolishness. “We’ve made the case that dropping natural gas and oil from the U.S. “In many parts of the world, you’ve overbuilt wind, you’ve overbuilt solar,” one Goldman Sachs executive told Bloomberg TV. “The situation illustrates the intermittency problem with renewables like wind and solar power and how outages can increase demand for fossil fuel generation,” Energy In Depth, a project of the Independent Petroleum Association of America that is run by FTI Consulting, wrote about Europe’s gas price crisis on September 22. And shale drillers themselves have proved reluctant to drill more wells even as prices lurch up - a fact that stems far more from drillers’ own wild overspending during the shale rush (and the resulting wave of bankruptcies and cratered stocks) than from anything related to, say, proposed-but-not-implemented climate policies or a small but growing shift to renewable power.īut there’s no shortage of examples of industry advocates suggesting the public should blame renewables for upheaval in the natural gas market. In reality, a wide range of factors - starting with a blast of LNG exports that now consumes roughly 10 percent of the United States’s total gas production - have launched prices higher in the U.S. Hundreds of people died as a result of the arctic blast, while gas producers whose product managed to make it to market reaped an $11 billion windfall - and now face allegations of price gouging.Īlready, the natural gas industry and its backers have begun casting blame on others for the gas market’s upheaval, suggesting that consumers hold the industry’s proposed villains responsible for the industry’s price issues. South and caused widespread power outages. Today’s price surges follow gas price spikes during the Texas freeze last February that shattered cold-weather records across the U.S. Major bank Citi said it won’t rule out $100/mcf for cargoes of liquefied natural gas (LNG) this winter, a tab for the supercooled form of the fossil fuel that’s used to ship it between continents which dwarfs even today’s record-setting heights. prices could multiply again, hitting $40 per thousand cubic feet (mcf), up from about $5 now. ![]() In the U.S., deals to sell natural gas this winter carry a price tag that’s roughly double or triple the costs in recent years, with a few traders placing bets that U.S. The UK is experiencing a natural gas price surge so severe that the government stepped in to prevent a cascade down the supply chain that threatened to create food shortages. ![]() ![]() Natural gas’s notorious price volatility has been making a comeback - in a big way.
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