Europe’s gas shortage could make the whole world pay more to get warm this winter

Published

3 years ago

September 15, 2021

admin

A liquefied natural gas (LNG) tanker arrives at a gas storage station.

STR | AFP | Getty Images

Natural gas prices have surged more than 35% in the past month, as worries grow there is not enough gas stored up for the winter should temperatures be especially cold in the northern hemisphere.

The usually quiet market for the commodity has become hot in the last couple of weeks, as investors focus on the growth in demand around the world and supplies remain below normal. The biggest problem area is Europe, where supply is at a record low for this time of year.

Even in the U.S., the amount of gas in storage is 7.6% below the five-year average, according to recent data from the U.S. Energy Information Administration. Natural gas is an important heating fuel and is responsible for about 35% of power generation in the U.S., the federal agency found.

“People are starting to throw the ‘crisis’ word around” when it comes to Europe, said John Kilduff, partner with Again Capital. He said natural gas in storage in Europe is 16% below the five-year average, and the level in storage is a record low for September.

“Europe is squarely behind the eight ball going into the winter season. It’s going to put the focus on this commodity that’s been overlooked for the last several years,” said Kilduff.

The tipping point could come in several months when it becomes clear what type of winter is ahead for Europe, and also the U.S. Some analysts say in an extreme scenario, U.S. prices could double if there is an extended cold spell, particularly in Europe where shortages could get severe.

“If the winter is mildly cold, it’s going to be problematic for sure,” said Francisco Blanch, head of commodities and derivatives strategy at Bank of America.

Rising prices for natural gas

Natural gas futures for October jumped nearly 5.3% Monday, to about $5.20 per one million British thermal units, or mmBtus. Natural gas is up 106% year-to-date and is the highest in more than seven years. But the equivalent gas in Europe and Asian markets is upwards of $20 per mmBtus.

“The U.S. is supposed to be an island, but in the last three or four years, there’s an increasing link between the U.S. and global market,” Blanch said. “We’ve gone from 50% correlation to 95% correlation. The U.S. market is being dragged around by this.”

The U.S. has been exporting natural gas, in the form of liquified natural gas shipments. The shipments have grown to about 10% of U.S. production, analysts said. South Korea is the largest customer, followed by China and Japan, according to U.S. government data. But buyers also include Brazil India, Poland, Spain, France and Portugal.

“If it’s a cold winter, gas will not just be tight. It will be very tight,” said Daniel Yergin, vice chairman of IHS Markit. If that’s the case, prices could go sharply higher. “It will either be physical shortages, or it will be reflected in price.”

Strategists say for now the world’s gas supply is stretched, but prices could fall if the autumn and early winter are mild, and more gas is put in storage.

“We lean toward a lot of risks for price spikes, rather than higher and higher sustained prices,” said Christopher Louney, commodities strategist at RBC.

Weather patterns and gas demand

Brian Lovern, chief meteorologist at Bespoke Weather, said the U.S. is in a La Niña state, which could mean a warmer than normal October and November in the northern U.S.

Fewer days that require heating could mean more gas will go into inventories before the coldest winter weather.

“I think in a few weeks, the weather is going to give us some bearish headwinds [for natural gas] as we get into the October, November period. That does not mean we won’t see a colder winter,” he said.

Europe’s winter will depend on a weather pattern that sets up over Greenland. “The early indications do not indicate a big cold winter over there,” Lovern said.

The market is anxious about a repeat of last year, when a cold winter in Europe resulted in a larger-than-normal drawdown of gas.

Supplies were not built back up enough in Europe, and analysts said lately Russia had cut back on some exports into Europe. But the new Nord Stream 2 pipeline, bringing natural gas from Russia to Europe, could resolve some of the supply problems for the continent in the next couple of months.

Russia’s Gazprom last week announced completion of the pipeline, which had once been opposed by the U.S. The pipeline would allow Russia to double gas exports to Europe. Germany’s energy regulator Monday said it has four months to complete certification of Nord Stream 2.

Global impact

The situation in Europe has caught the attention of U.S. officials. Amos Hochstein, the U.S. State Department’s senior advisor for energy security, told reporters Friday that he was concerned about supply, and potential shortages if the winter is very cold.

Hochstein said U.S. deliveries of liquified natural gas, known in the industry as LNG, can be increased and Russia is coming off the period of low supply.

“There’s different explanations for what’s going on, why Russian supplies are constrained,” said Yergin. “Russian and German regulators are in a debate as to whether new regulations apply that were put in place after the pipeline was given its final investment decisions.”

Yergin said Asian demand has also been a factor in the short supplies. Chinese liquified natural gas demand was 20% higher than what was anticipated, he said.

TortoiseEcofin’s senior portfolio manager Rob Thummel said Europe also did not get sufficient liquified natural gas cargoes to rebuild its inventories. “What happened was Brazil hydroelectric power didn’t come to fruition,” he said.

“There was drought, so Latin America and Brazil needed natural gas,” Thummel added. During Europe’s summer, “a lot of LNG… ended up in Brazil in particular.”

Supplies in Europe were not replenished, and there was a jump in demand. “Asia and China in particular got nervous. They started buying LNG,” he said.

Thummel said he does not expect a serious problem for the U.S. this winter, and prices could come back down. He said there has been an increase in rig count in the Haynesville shale. “You’re likely to see higher volumes,” he said.

One issue for the U.S. has been lower volumes of shale oil production. A byproduct of that production is natural gas.

“I would say the volatility in U.S. price will not be the same as it has been, and likely will be in Europe,” said Thummel. The amount of gas going into winter is about 8% below the five-year storage average, but “it’s not the end of the world,” Thummel said.

As natural gas prices have jumped, so have the stocks of gas producers, like the largest EQT, Range Resources, and Antero Resources. Investors have also jumped into the United States Natural Fund ETF, which bets on the commodity.

Environment

Daily EV Recap: EVs that can power your home

Published

11 hours ago

April 19, 2024

admin

Daily EV Recap: EVs that can power your home

Listen to a recap of the top stories of the day from Electrek. Quick Charge is now available on Apple Podcasts, Spotify, TuneIn and our RSS feed for Overcast and other podcast players.

New episodes of Quick Charge are recorded Monday through Thursday and again on Saturday. Subscribe to our podcast in Apple Podcast or your favorite podcast player to guarantee new episodes are delivered as soon as they’re available.

Stories we discuss in this episode (with links):

You can power your home for 21 days with a Chevy Silverado EV and GM’s new bidirectional charger

Hyundai bets on new materials to improve its upcoming electric vehicles

Tesla launches website to convince shareholders to vote for Elon’s $55 billion payday

XPeng CEO shares NGP self-driving footage in Germany, teasing full roll out coming to EU

2023 was a record year for wind power growth – in numbers

Listen & Subscribe:

Share your thoughts!

Drop us a line at tips@electrek.co. You can also rate us in Apple Podcasts or recommend us in Overcast to help more people discover the show!

Add Electrek to your Google News feed.

FTC: We use income earning auto affiliate links. More.

Environment

Disneyland faces pressure to electrify its stinky ‘Autopia’ ride, and quick

Published

14 hours ago

April 18, 2024

admin

Disneyland faces pressure to electrify its stinky 'Autopia' ride, and quick

Disney’s Autopia ride has been making headlines recently, after a park spokesperson told the LA Times that the park is “evaluating technology that will enable us to convert from gas engines in the next few years.” But activists want to put the pressure on to ensure that Disney goes all-EV with the ride, and fast.

The news was reported in many outlets suggesting that Disney is going all-electric with Autopia, but unfortunately, Disney’s statement is a little noncommittal and open on that front. We’ve seen a lot of automakers call 100% gas-powered hybrids as “electrified,” and given that Disney was nonspecific about both its timeline and powertrain source, there’s still room for pressure to ensure that Disney goes with an all-electric choice.

Autopia is a classic ride in Disneyland’s “Tomorrowland” area, but given the EV world we’re living in, its stinky gas-powered cars certainly don’t seem too futuristic.

Until 2016, Autopia vehicles were noisy, polluting two-stroke engines. Two-stroke engines differ from four-stroke in that they can create more power in small formats, but are much dirtier because the combustion process is less complete in a two-stroke engine, and thus exhaust contains ~30x higher levels of particulate emissions (for example, running a two-stroke gas leafblower for one hour can make as many poisonous emissions as driving a passenger car 1,100 miles).

The emissions from these engines cause smog and harm the health of those who breathe them – so putting them directly in front of small children isn’t the best idea. But the ride was sponsored by Chevron from 1998-2012, and that company is pretty dedicated to poisoning small children anyway, so it was apt.

Thankfully, in 2012, Disney attracted a new sponsor, Honda, and in 2016, Honda upgraded the engines to small four-stroke engines, reducing noise and pollution significantly. However, the cars still create exhaust, which is still poisonous to the children riding behind these polluting engines. It’s also poisonous to employees, to the point where Disney pays hazard pay to employees who are assigned to staff the ride.

2016 was also notably after EVs had proven themselves in the automotive realm. So upgrading to an old technology seems a little inappropriate for “Tomorrowland.” But Honda themselves have been behind the ball on the EV transition as well.

Tomorrowland is the section within Disneyland which was meant to show visions of the future. It first opened in 1955, and offers a time capsule of what a 1950s vision of the future might have looked like.

Needless to say, in the seven decades hence, things have changed somewhat. To the point where the original designer of the Autopia cars, Bob Gurr, who is now 92 and was interviewed by the LA Times, said “get rid of those God-awful gasoline fumes.”

It’s certainly ironic that in California, where EVs keep setting sales records and where you can’t even buy gas-powered “small off-road engines” anymore, a Disneyland parkgoer might drive to the park in a clean EV, only to show their children a vision of the past with a poisonous, low-performing gas engine on one of the admittedly more-fun rides in the park. Just imagine how much more fun the ride could be if it were electric.

And Disney could do a lot more to update Tomorrowland with actual visions of the future, rather than an old-timey time capsule. The original Tomorrowland featured a “Carousel of Progress” show of futuristic efficient home appliances, and the Monorail and PeopleMover which both still exist. Disney could showcase more public transport or other post-car mobility options, ideas for futuristic city planning, induction cooktops and more.

But for now, making Autopia electric seems like incredibly low-hanging fruit. Electric go-karts are nothing new, and while Disney’s commitment to move away from gas in the “next few years” is good to hear, it’s been a long time coming, and now isn’t the time to wait.

To this end, local EV advocates and Plug In America are hosting a “Dump the Pump” rally this Sunday, April 21 at 10am at Walt Disney Studios in Burbank. Not a bad way to spend Earth Day weekend, perhaps after attending one of the LA-area Drive Electric Earth Month events the day before (and one of the founders of Drive Electric Week, Zan Dubin-Scott, is organizing the Burbank rally).

Given Disney’s 2030 net-zero pledge (which is ambitious compared to many companies), it’s about time they ditch gas at Autopia – and not just in the “next few years,” but maybe before next Earth Day rolls around. How about it?

FTC: We use income earning auto affiliate links. More.

Environment

Nissan Micra EV to debut later this year as new low-cost electric car

Published

15 hours ago

April 18, 2024

admin

Nissan Micra EV to debut later this year as new low-cost electric car

Another affordable electric car is set to be unveiled later this year as Nissan looks to boost EV sales. Nissan will unveil a new Micra EV as its newest low-cost electric car.

Nissan has been teasing an electric Micra successor for several years now. The new EV was previewed as part of the Renault-Nissan-Mitsubishi alliance.

Over two years ago, the company claimed, “This all-new model will be designed by Nissan and engineered and manufactured by Renault using our new common platform.”

The entry-level EV was part of the Alliance’s plans to invest 23 billion euros ($24.5 billion) over a five-year period to kick off its EV offensive. Nissan unveiled its own business update last month as it looks to cut costs and introduce affordable EVs.

Nissan’s new “Arc” business plan aims for “significant next-generation EV cost reduction” through its partnerships and technology.

The automaker is preparing to launch five new electric cars soon. In November, Nissan revealed an up to £3bn ($3.8B) investment to build three new EVs at its Sunderland factory, including an electric Juke, Qashqai, and its LEAF successor.

Nissan-sporty-urban-EV — Nissan Concept 20-23 electric car (Source: Nissan)

Nissan Micra EV to arrive as a new low-cost option

However, Nissan will kick things off with the Micra EV, which will be unveiled later this year. It will be Nissan’s latest low-cost electric car as it looks to satisfy growing demand.

Although Nissan has yet to reveal full details, it’s expected to ride on the same AmpR Small Platform used to power the Renault 5. The Renault features up to 249 miles range from a 52 kWh battery, and the Nissan Micra EV is expected to boast similar numbers.

It could also offer smaller battery options, like 40 kWh, good for 186 miles range, at a lower price point.

According to Auto Express, the Micra EV will be the first of Nissan’s new electric car lineup. The new low-cost EVs’ design is expected to be closer to that of the Ariya, as sources have also indicated with the new LEAF.

Nissan said it aims to reduce the costs of its new electric models by 30% by developing “EVs in families, integrating powertrains, utilizing next-gen manufacturing, group sourcing, and battery innovations.”

The automaker expects that by focusing on these areas, its electric cars will achieve price parity with gas-power vehicles by 2030 (if not sooner).

Nissan also plans to introduce new EV batteries, such as all-solid-state, to gain a competitive advantage. It kicked off construction on its new all-solid-state EV battery pilot line this week.

FTC: We use income earning auto affiliate links. More.