Domestic energy prices are about to soar

 by IWB

This summer has had a feature which will be arriving on the doorstep or in the email inboxes of domestic energy consumers soon if it has not already. The situation was described by oilprice.com like this last night.

The era of cheap natural gas might be gone for good.  U.S. natural gas futures climbed to a 31-month high of 4.16/MMBtu on Thursday thanks to forecasts for hotter weather over the next two weeks and soaring global gas prices ensuring that U.S. liquefied natural gas (LNG) exports will remain at record highs.

So there was both domestic and international pressure for higher prices which always feels initially wrong in summer but is the impact of all those air conditioners being turned up.

Refinitiv has projected that average gas demand, including exports, will climb from 90.9 bcfd in the current week to 94.5 bcfd next week as cooling demand keeps rising. Next week’s forecast is actually lower than anticipated because some power generators will be forced to burn coal instead due to increasingly high natural gas prices.

It is hard not to have a wry smile at coal demand rising just as the IPCC tells us this.

 

“The role of human influence on the climate system is undisputed.”

Actually it is disputed but presumably not in their corridors and crucially is not how science works which is that all things are disputed to find a better explanation. But returning back to coal is not only happening in the US.

Coal-fired power generation in China is bucking global trends and getting ready to get bigger.

The nation’s National Development and Reform Commission last week announced that operations will resume in dozen of coal mines. The reopening is due to surging demand in the past year as China’s economy recovers from the COVID-19 pandemic. ( power-eng.com)

So we have a factor in our equation which is simply higher demand both outright and above what was expected.

Prices have shot up

As oilprice.com continues.

According to a report in the Financial Times, natural gas prices have climbed sharply across Europe and Asia thanks to tighter supplies, lower production volumes in Europe, as well as lower exports from Russia.

Consequently, natural gas prices in Europe have surged to around 40 euros per mWh (~14/MMBtu) for the first time ever, with UK gas prices at the highest levels in 16 yearsThe situation is even direr in Asia where gas prices have hit $15/MMBtu

The Financial Time piece from July 30th brings the price rises home.

In the UK, prices have risen above 100p a therm, the highest level since 2005 and a record for the summer. In Europe, prices have hit €40 per megawatt hour for the first time. A therm measures the amount of energy contained in natural gas and is sometimes used to calculate utility bills.

This morning the FT has pointed out some further consequences of this.

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