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The Era of Cheap Natural Gas Ends as Prices Surge by 1,000%

edited August 2021 in Other Investing
Demand meets supply in a greening marketplace.....
Natural gas, used to generate electricity and heat homes, was abundant and cheap during much of the last decade amid a boom in supply from the U.S. to Australia. That came crashing to a halt this year as demand drastically outpaced new supply.

....there is a growing consensus that the world is facing a structural shift, driven by the energy transition.

With few other options, the world is expected to depend more on cleaner-burning gas as a replacement to coal to help achieve near-term green goals. But as producers curb investments into new supply amid calls from climate-conscious investors and governments, it is becoming apparent that expensive energy is here to stay.

....the green movement could disrupt the delivery of adequate and affordable supply to consumers
The midstream investments I made last year (mostly for their income production) are still making sense to me today. Perhaps that will continue to be the case for a few years??? The transition era marketplace dynamics are interesting to watch.....

The Era of Cheap Natural Gas Ends


  • edited August 2021
    A rather misleading click-baity headline. The natural gas ETF, which admittedly is not a perfect proxy, is up 0.03% today-- Talking about prices off of 2020 pandemic lows when oil went briefly to zero is absurd. Also, natural gas, while better than coal, is really not clean energy, so this line--"With few other options, the world is expected to depend more on cleaner-burning gas as a replacement to coal to help achieve near-term green goals."--is irksome:
  • If the cost is in fact $15/MMBTU, that isn’t good. The chart shows Europe and Asia, not North America.
  • edited August 2021
    The authors acknowledged the attention grabbing aspect of their headline when they stated "European natural gas rates have surged more than 1,000% from a record low in May 2020 due to the pandemic, while Asian LNG rates have jumped about six-fold in the last year." And, they don't view natural gas as a final green solution to the climate change problem ("Countries championed gas as a way to quickly reduce their carbon footprint.") What I took from the article is a suggestion that global natural gas prices may well remain firm and perhaps rise substantially in the mid-term until alternative energy sources that are globally affordable and greener become available -- depending on how global regulations and investor demands evolve as the energy transition continues.
  • A rise in prices, should they occur, would lead to a return of exploitation of available US stores; which should, in turn, drop the prices. I hardly think it would be the end of the world as we know it.
  • Small changes true but electric generation will swing slightly towards coal this year:
    “ We expect coal consumption for electricity generation to grow by 75 MMst (17%) in 2021 as a result of relatively high natural gas prices that make coal more competitive for dispatch in the electric power sector. Forecast electric power sector demand for coal then falls by 47 MMst (9%) in 2022. We expect demand for coal for other uses to rise by 5 MMst (13%) in 2021 and by 3 MMst (7%) in 2022. This increase is mostly for coking coal, which is used in steelmaking.”
  • Interesting , but estimate for gas seems low. Cost has risen to $3.00 / gal. in my neck of the woods. I look for the price to rise until Labor Day passes.
    Stay Kool, Derf
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