Natural gas prices are rising and could be the most expensive in 13 years this winter

Published

3 years ago

September 10, 2021

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In this article

Flames from a flaring pit near a well in the Bakken Oil Field. The primary component of natural gas is methane, which is odorless when it comes directly out of the gas well. In addition to methane, natural gas typically contains other hydrocarbons such as ethane, propane, butane, and pentanes.

Orjan F. Ellingvag | Corbis News | Getty Images

Natural gas prices have doubled this year and are expected to continue to rise, resulting in larger winter heating bills for some consumers and higher costs for electric utilities.

Natural gas is plentiful in the United States and has been cheap for years, so the jump in prices this year is eye popping. It has also lifted the shares of companies that specialize in natural gas production, like EQT, Range Resources, Cabot Oil and Gas and Antero Resources.

In the futures market, the natural gas contract for October rose above $5 per one million British thermal units, or mmBtus, for the first time since February, 2014. Besides electricity and heating demand, natural gas is an important feed stock and is used in the processing of chemicals, fertilizers, paper and glass, among other products.

“We haven’t had tight supplies of natural gas in years. We’re staring that down this year,” said John Kilduff, partner with Again Capital.

Natural gas prices have been caught in their own perfect storm, of lower supplies and rising demand. Prices raced higher, first as unprecedented heat stoked air conditioning demand across the U.S., particularly in the Northwest. As a result, less gas was put into storage for winter months, during the key summer injection period.

Add to that any colder than normal winter weather and prices could jump more. “Anything closer to [or colder than] a full standard-deviation form average would likely trigger a price spike to cause demand destruction with gas above $10/mmBtu,” Goldman Sachs analysts note. Gas prices were last that high in 2008.

Kilduff said natural gas is tied tightly into the economy, and for a long period prices did not matter. Now, utilities will pay more and so will some consumers who have real time pricing schemes. “You could easily see it reach $6 and you could see it get to $8 to $10,” he said. “Any early season cold weather outbreak will juice this thing.”

The upward pressure on gas prices is global, and since the U.S. is an exporter, prices in North America are now more influenced by prices in other markets.

“We’ve seen it all over the last year with the pandemic. We saw natural gas prices around the world at $2. It was $2 here in the U.S., $2 in Europe and $2 in Asia,” said Cheniere Energy CEO Jack Fusco on CNBC. “As the economies began to ramp back up, and countries and companies worldwide decided natural gas was the fuel of choice for clean energy transmission, the demand has just skyrocketed.”

Fusco said prices for the same gas that is $5 in the U.S. is now $20 or more in Europe and Asia. He also said his company, which exports liquified natural gas, is sold out of 90% of its production for the next 20 years.

Now, the U.S. industry is also suffering from lower production due to Hurricane Ida, with 77.3% of Gulf of Mexico production still shut in. According to the Energy Information Administration, the level of gas in U.S. storage is 7.4% below the five-year average and 16.8% below the level last year at this time.

The dynamic of rising demand and lower inventories has been attracting investors into the shares of natural gas producers, as well as the United States Natural Gas Fund ETF.

“I look at the natural gas situation. The storage levels are way below historic norms,” said Leon Cooperman, chairman and CEO of the Omega Family Office. Cooperman said on CNBC Thursday that his biggest positions are contrarian holdings in the energy market.

Natural gas prices are flaring as the Biden Administration is pressing for higher dependencene on renewable energy in the electricity market. On Wednesday, the White House called for solar energy to power nearly half the electric grid by 2050. It is now just 3% of the power supply.

But natural gas is likely to remain an important fuel for years to come. The EIA, in its short-term outlook, said natural gas should provide 35% of power generation in 2021 and 34% in 2022. The government forecast the average price of natural gas this year will be $4.69 per mmBtus.

The EIA said the share of natural gas as a generation fuel will decline through next year because of the anticipated increase in renewable sources, but also coal.

“As a result of the higher expected natural gas prices, the forecast share of electricity generation from coal rises from 20% in 2020 to about 24% in both 2021 and 2022,” according to EIA. “New additions of solar and wind generating capacity are offset somewhat by reduced generation from hydropower this year, resulting in the forecast share of all renewables in U.S. electricity generation to average 20% in 2021, about the same as last year, before rising to 22% in 2022.”

Environment

YMX Logistics deploys 20 new Orange EV electric yard trucks

Published

9 hours ago

November 22, 2024

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YMX Logistics deploys 20 new Orange EV electric yard trucks

YMX Logistics and Orange EV Join Forces to Deliver Zero Emission Transportation Solutions to Yard Operations Across North America

Leading yard operation 3PL YMX Logistics has announced plans to deploy fully twenty (20) of Orange EV’s fully electric Class 8 terminal trucks at a number of distribution and manufacturing sites across North America.

As the shipping and logistics industries increasingly move to embrace electrification, yard operations have proven to be an almost ideal use case for EVs, enabling companies like Orange EV, which specialize in yard hostlers or terminal tractors, to drive real, impactful change. To that end, companies like YMX are partnering with Orange EV.

“This relationship between YMX and Orange EV is a significant step forward in transforming yard operations across North America,” said Matt Yearling, CEO of YMX Logistics. “Besides the initial benefits of reduction in emissions and carbon footprint, our customers are also seeing improvements in the overall operational efficiency and seeking to expand. Our team members have also been sharing positive feedback about their new equipment and highlighting the positive impact on their health and day-to-day activities.”

This Orange looks good in blue

YMX Logistics electric yard trucks; by Orange EV.

One of the most interesting aspects of this story – beyond the Orange EV HUSK-e XP’s almost unbelievable 180,000 lb. GCWR spec. – is that this isn’t a story about California’s ports, which mandate EVs. Instead, YMX is truly deploying these trucks throughout the country, with at least four currently in Chicago (and more on the way).

“Our collaboration with YMX Logistics represents a powerful stride in delivering sustainable yard solutions at scale for enterprise customers,” explains Wayne Mathisen, CEO of Orange EV. “With rising demand for electric yard trucks, our joint efforts ensure that more companies can access the environmental, financial, and operational benefits of electrification … this is a win for the planet, the workforce, and the bottom line of these organizations.”

We interviewed Orange EV founder Kurt Neutgens on The Heavy Equipment Podcast a few months back, but if you’re not familiar with these purpose-built trucks, it’s worth a listen.

HEP-isode 26

SOURCE | IMAGES: YMX Logistics.

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Environment

Hyundai IONIQ 9 debut, new NACS Kia, solid state batteries from Honda

Published

10 hours ago

November 22, 2024

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Hyundai IONIQ 9 debut, new NACS Kia, solid state batteries from Honda

On today’s thrilling episode of Quick Charge, we’ve got the all-new Hyundai IONIQ 9 and its “a “rolling living room” pivoting captain’s chairs, Kia gets a go-fast 7 passenger SUV and an updated EV6, while Honda announces plans to start producing solid-state batteries at its new facility in just a few weeks.

We’ve also got big news for American workers – a Minnesota power company is ditching coal for solar while ExxonMobil and LG Chem get to work extracting thousands of tons of lithium out of Tennessee’s soil.

Today’s episode is sponsored by BLUETTI, a leading provider of portable power stations, solar generators, and energy storage systems. For a limited time, save up to 52% during BLUETTI’s exclusive Black Friday sale, now through November 28, and be sure to use promo code BLUETTI5OFF for 5% off all power stations sitewide. Learn more by clicking here.

You can watch the episode, below.

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Environment

One of the US’s first solar peaker plants – with Tesla Megapacks – just came online

Published

11 hours ago

November 21, 2024

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One of the US’s first solar peaker plants – with Tesla Megapacks – just came online

Arevon Energy has kicked off operations at Vikings Solar-plus-Storage – one of the US’s first utility-scale solar peaker plants.

The $529 million project in Imperial County, California, near Holtville, features 157 megawatts of solar power paired with 150 megawatts/600 megawatt hours of battery storage.

Vikings Solar-plus-Storage is designed to take cheap daytime solar power and store it for use during more expensive peak demand times, like late afternoons and evenings. The battery storage system can quickly respond to changes in demand, helping tackle critical grid needs.

Vikings leverages provisions in the Inflation Reduction Act that support affordable clean energy, strengthen grid resilience, boost US manufacturing, and create good jobs.

The Vikings project has already brought significant benefits to the local area. It employed over 170 people during construction, many local workers, and boosted nearby businesses like restaurants, hotels, and stores. On top of that, Vikings will pay out more than $17 million to local governments over its lifespan.

“Vikings’ advanced design sets the standard for safe and reliable solar-plus-storage configurations,” said Arevon CEO Kevin Smith. “The project incorporates solar panels, trackers, and batteries that showcase the growing strength of US renewable energy manufacturing.”

The project includes Tesla Megapack battery systems made in California, First Solar’s thin-film solar panels, and smart solar trackers from Nextracker. San Diego-based SOLV Energy handled the engineering, procurement, and construction work.

San Diego Community Power (SDCP) will buy the energy from the Vikings project under a long-term deal, helping power nearly 1 million customer accounts. SDCP and Arevon have also signed an agreement for the 200 MW Avocet Energy Storage Project in Carson, California, which will start construction in early 2025.

Vikings is named after the Holtville High School mascot, and Arevon is giving back to the local community by funding scholarships for deserving Holtville High students.

Arevon is a major renewable energy developer across the US and a key player in California, with nearly 2,500 MW in operation and more than 1,250 MW under construction.

If you live in an area that has frequent natural disaster events, and are interested in making your home more resilient to power outages, consider going solar and adding a battery storage system. To make sure you find a trusted, reliable solar installer near you that offers competitive pricing, check out EnergySage, a free service that makes it easy for you to go solar. They have hundreds of pre-vetted solar installers competing for your business, ensuring you get high quality solutions and save 20-30% compared to going it alone. Plus, it’s free to use and you won’t get sales calls until you select an installer and share your phone number with them.

Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisers to help you every step of the way. Get started here. –trusted affiliate link*

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