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85 comments on DrumBeat: May 21, 2006

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reno on May 21, 2006 - 9:02am Permalink | Subthread | Comments top
What ever happened to the natural gas crisis I thought we were going to have??  Has Matthew R. Simmons changed his tune about natural??

And check out Cost of raising corn grows

Another factor beyond his control also will affect Worthington's 1,100-acre crop farming operation this year: high-priced diesel fuel, fertilizer, propane and other energy products. By his estimate, those costs will add $22 per acre to his production expenses on 750 acres of corn - $16,500 in all.

"When you put the LP costs and the fertilizer and the diesel together, you're talking serious dollars," said Worthington, a 43-year-old, third-generation Iowa farmer. "Something has to give."

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LJR on May 21, 2006 - 9:11am Permalink | Subthread | Parent | Comments top
Good link!  Thanks.
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Nate Hagens on May 21, 2006 - 9:14am Permalink | Subthread | Parent | Comments top
We had the warmest winter on record in North America. Average temps were 10 degrees above normal in much of US so there was alot of natural gas left over in storage. Each year there are two high demand seasons for NG - summer and winter. Each year going forward we will run the gauntlet of risk of hot summer or cold winter. We are stuck with 30-40% depletion rates on domestic wells, Canada using more and more of her NG to fire tar sands operation, and delays and political problems with increased LNG ports.

The market doesnt work in situations like this. End users can earn a 100%+ return by buying front month NG now and storing it against Jan-Feb needs (price is over double). But there does NOT exist such storage capacity otherwise people would be doing it. NG market will continue to be just in time inventory - crisis will be here first time we have hot summer or cold winter. (Russia had a VERY cold winter this year).

The mild winter has (because of lowering NG demand) put some relief on coal/rail infrastructure and if there is alot of left over NG by summers end it will likely replace coal for power demand at the margin rather than be potentially flared (gasp!).

This is a long winded answer of saying the crisis in NG in US exists -it just has a time lag.

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Jack Greene on May 21, 2006 - 10:12am Permalink | Subthread | Parent | Comments top
good post - I will use part of it in my show tomorrow.
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Nate Hagens on May 21, 2006 - 2:18pm Permalink | Subthread | Parent | Comments top
Here is a graphic from James Hansens presentation on Peak Oil and Climate Change

See bottom middle graphic for disparity of temperatures in US/Canada vs Europe/Russia

hansen jan temp

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Darwinian on May 21, 2006 - 10:32am Permalink | Subthread | Parent | Comments top
We did have a natural gas crisis.

Natural Gas production is at its lowest point in years though stocks are building. It is all the result of demand destruction. In the last three years, because of very high natural gas prices, many industrial users, such as nitrogen fertilizer producers, have moved overseas where natural gas prices are much lower. It is easy for a lot of people. Natural gas prices of over $15 last November was the death knell for many industrial users. They either moved overseas or just closed their doors for good.

US natural gas production peaked in 1973 then reached a secondary but lower peak in 2001. We are definitely on the downhill side of the peak and will see lower production each year. But because people can either close shop, move overseas or switch to coal for power generation, we will not likely see prices above $15 again for several years.

http://tonto.eia.doe.gov/dnav/ng/ng_prod_sum_dcu_NUS_m.htm

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Sangiovese on May 21, 2006 - 10:56am Permalink | Subthread | Parent | Comments top
The UK got through last winter with two close misses. More problems seem to be in store this winter.

http://money.guardian.co.uk/utilities/story/0,,1779621,00.html

We have local gas storage tanks in the UK that move up and down with the volume being stored. The local tank, less than a mile from where I live, dipped to its lowest level early winter that I had ever witnessed. Interestingly after a cold spell in March the height was raised in April only to take a dive last month close to the winter level and has stayed low.

I think the UK is going to be very 'interesting' this winterin relation to NG.

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pianoguy on May 21, 2006 - 12:55pm Permalink | Subthread | Parent | Comments top
What ever happened to the natural gas crisis I thought we were going to have??

It's still coming. Denver, as you probably heard, had its first-ever winter blackout, partly due to a downturn in natural gas supply. A fluke, according to Xcel Energy, but many new patterns begin as flukes.

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Kalpa on May 21, 2006 - 2:46pm Permalink | Subthread | Parent | Comments top
I have noticed that truck speeds have definitely decreased over the past six months, or so, on I-(GO)80 between Nebraska and Colorado.
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Kalpa on May 21, 2006 - 2:47pm Permalink | Subthread | Parent | Comments top
Sorry, I put that under the wrong pianoguy post!
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