by Hughj » Wed 22 Jun 2011, 14:31:06
An excellent article from Yahoo Finance explaining the 15 dollar bubble and subsequent
collapse of natural gas prices. Because of deep gas discoveries as well as liquified natural
gas marketing from abroad, natural gas will remain an affordable commodity for the foreseeable
future.
It's also important to note that CNG and LNG are workable replacements in auto and truck
transportation should crude be priced out of reach.
Hugh
"For all the whining, whimpering, boo-hooing, ululating and pandering political polemics about America's dependence on foreign oil, the solution could be right beneath our feet. America has massive stores of natural gas at its disposal, most of which are unused or considered a nuisance. Natural gas is largely unavailable for consumer use, yet the gasoline alternative already fuels cabs, shuttles, buses and a variety of other vehicles. What the latter camp has that traditional cars don't is that they are centrally serviced and thus capable of being refueled despite a lack of natural gas stations on U.S. roads.
Natural gas is cleaner burning, abundant and an alternative to America's long-standing policy of grovelling at the feet of the Middle East, a region whose one commonality seems to be hating the U.S.
So buy natural gas, right?
Only if you're one of Barnum's suckers born every minute, says Stephen Schork, editor of the Schork Report. Schork says natural gas demand crashed in the wake of the Great Recession and it's not coming back in the foreseeable future. The unloved alternative was trading over $13 per btu (British Thermal Units) until July of 2008. When the global bubble popped, so did the price of natty, falling off a cliff to the neighborhood of $4/btu. That's where the price of natural gas remains today, a flaming deathtrap of "value."
According to Schork, a big part of the drop-off is due to environmentalists falling out of love with natural gas as bridge fuel, sort of a weigh station between crude oil and a world of wind, solar and enormous power plants housing energy-producing hamster wheels. Once the endpoint of greenery was pushed further into the future, the passion for natural gas waned.
This natural gas antipathy means no money for the infrastructure is required to create natural gas stations and other research dollars needed to make the switch. Of course there isn't anywhere to plug in the minuscule number of subsidized electric cars, nor a modernized energy grid that wouldn't brown out the entire Eastern seaboard in the event of millions of American commuters plugging in their cars at once. But that's another column.
For now, let's just stick with Schork's bottom line: "In the case of natural gas, we have too much supply and not enough demand." That spells lower prices for natty from now until long after the world has devolved into a dystopian hell where leather-clad killers in hockey masks spend their lives in pursuit of Mel Gibson and his adorable dog."