Natural Gas Futures

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peakbagger

Minister of Fire
Jul 11, 2008
7,696
Northern NH
I mentioned in another thread but it probably deserves its own thread. Someone I know is very attune in future natural gas pricing was commenting yesterday that the current hedge price for natural gas delivery in January 2023 is in the $30 per MMBTU range. Gas was in the $2 to $3 range not that long ago. Its currently in the $6 to $8 range. The future pricing factors in all sort of bad news but if someone needs to lock in price and needs the gas that is the price. https://www.macrotrends.net/2478/natural-gas-prices-historical-chart

Consumers are generally isolated from these price variations by their utility with a winter and summer rate but the utilities are out there buying futures so the rates are going to be impacted. Drill baby drill in the US really will not help until the US hits the limits of LNG gas production, its far more profitable to sell it offshore than to keep it domestic. Industry has slowly been ramping up this capacity with cross country pipelines ending at LNG plants. The pipelines are frequently controversial in the east and are always represented as a means of keeping US gas prices cheap but the vast majority are there to maximize profits by shipping it offshore.

Even if someone is burning wood, they have to keep in mind that their employer probably is not and I have no doubt that some industries will choose to shut down rather than afford to heat their buildings and processes. Power prices will also be high in areas like New England that rely on natural gas plants.
 
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EbS-P

Minister of Fire
Jan 19, 2019
3,588
SE North Carolina
I don’t see how we are not looking at 10-30% electric rate hikes in the near future. I’m not sure what mechanisms are in place in the regulated markets where a utility commission must approve rate increases, when utilities experience unexpected fuel cost increases.

30$ Man that’s expensive
 

Brian26

Minister of Fire
Sep 20, 2013
682
Branford, CT
Looks like almost every New Hampshire electric utility is requesting close to a 50% rate hike in the state.

CONCORD – The state’s largest utility Eversource argued before the Public Utilities Commission Tuesday to increase its rate as New Hampshire electric consumers brace for bills going up by about 50 percent for at least the next six months.

The state’s four utilities plan to pass on the skyrocketing costs of making the energy to its members and customers and are in the process of getting that approval.

The price hike is mostly because of the exploding price of natural gas, used to make about 60 percent of the electricity in the state. Both utility officials and the state’s consumer advocate agree that the Russian war in Ukraine is disrupting supply chains.

 

EbS-P

Minister of Fire
Jan 19, 2019
3,588
SE North Carolina
50% Is steep. I get it. But I also really feel we need to look at a windfall tax on gas an oil producers. My salary won’t be going up. But somewhere in the economic chain there are entities that are really benefiting from these prices. And at who’s expense. I’ll be fine my electric bill even if it doubles we can afford it. Many can’t.

My generation (I’m turning 40 next month) doesn’t remember any inflationary times. Earliest economic memories are of the dot com boom. Thought I got a pretty good deal with an interest rate of 6% on my first home at the age of 23.

Utility rate commissions can be a helpful to the consumer. But if they just rubber stamp and allow 100% pas through cost to the consumer I’m torn what level of profits the companies should be able to keep. Stock holders and executives first. I don’t have a choice who I buy my power from.
 
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tlc1976

Minister of Fire
Oct 7, 2012
1,144
Northwest Lower Michigan
I got a notice last month that my electric co op is going to re-evaluate their pricing in 2023.

Mine has been pretty steady. It’s been basically the same for the 23 years I’ve been a homeowner. Only real change they made was about 12 years ago they lowered the $/kwh by 1c and added a pretty substantial base fee. This was because of all the seasonal residents who only really use power for the summer and sometimes fall, but the lines have to be maintained year round. Actually they did this around the time of the previous record high fuel prices back around 2010, so they must make more revenue that way.

Will be interesting to see what next year brings.
 

ABMax24

Minister of Fire
Sep 18, 2019
1,716
Grande Prairie, Alberta, Canada
A lot of markup in natural gas to the US northeast comes at the hands of the utility companies. Natural gas futures for this winter in Alberta (where at least some of this gas originates) are under $6, pretty substantial profit for the utilities and pipeline operators.
 

woodgeek

Minister of Fire
Jan 27, 2008
4,788
SE PA
I recall the case where during high demand periods the New England utilities were reserving times to ship nat gas through the stretched pipelines, and then canceling the res the day before (free of charge). With the effect the pipeline then shut down during that period.

They then charged more for the nat gas and blamed the 'shortage' afterwards.

The longer I live outside of New England the more convinced I am that the politics there is deeply corrupt. And only in RI are they incompetent, and thus routinely charged.
 

ABMax24

Minister of Fire
Sep 18, 2019
1,716
Grande Prairie, Alberta, Canada
I locked in my gas rate today at $4.99/GJ (just slight less than a mmbtu) for the next 5 years. Up until now I've been at the variable wholesale rate, which was always cheaper, but not at the $8.53/GJ I paid last month.

Otherwise I've got a bunch of spruce and pine rounds at my parents acreage that are approaching 20% MC to split and haul home, along with some split and already dry birch and tamarack.
 

ABMax24

Minister of Fire
Sep 18, 2019
1,716
Grande Prairie, Alberta, Canada

After the increase it will be 26.87 cents per m^3, which works out to $6.87/GJ. Not that bad, spot price in Alberta is over $8, and so is the regulated rate if you use a company like Direct Energy.

Rate increases suck, but that's cheaper than our regulated rate, especially considering the gas comes from beneath our feet, and is shipped across the country by pipeline to Ontario.

 

ABMax24

Minister of Fire
Sep 18, 2019
1,716
Grande Prairie, Alberta, Canada
Another factor to consider in this, is what gas storage levels look like. If companies think that gas prices might drop toward winter there is little incentive to put gas into storage, selling it instead today is more profitable. Especially with more gas leaving the continent as LNG for Europe.

Generally this is the time of year when storage reservoirs are being filled with lower summer demand.

Unfortunately I don't have any insight to gas storage volumes, nor have I found a live website with such information.