I understand the reasoning of gasoline or heating oil going up because of refinery limitations and such (not that I fully believe it)
But why the reported huge increase in natural gas? Isn’t it pumped out of the ground and used without refining? There seems little in transportation costs, since it is moved in pipelines, not transported in vehicles for the most part.
Is the answer to this “Because they can?”
A good part of the nation’s NG comes from the Gulf region and a good part of that has been knocked out by the hurricanes.
The price had been rising before the hurricanes, as it usually does based upon the season, this has made things worse. The general trend over the last several years have been upward as well.
Help is NOT on the way. Get some longjonhs and turn down the heat.
Well that would make sense, but I thought most of our natural gas came from the western states (including Texas). Do you have some cite that shows a map of where our natural gas comes from? I haven’t been able to find anything useful. I’d like to know how much comes from offshore and how much onshore. I suppose it would be asking too much for actual evidence that a large part of our natural gas facilities were damaged by the hurricanes.
There is a map at this site that shows how much of the Natural gas goes through the gulf. Louisiana is practically covered.
Sorry I don’t have the specifics, but you can use the dropdown under NG to get some general production info:
http://www.eia.doe.gov/neic/rankings/rankindex.htm
Whatever the actual percentage drop, and I don’t know that, the price increase can far exceed the drop in supply.
And I agree with your earlier comment. There may well be some “fast dancing” by some suppliers in order to boast the price.
Suppliers have to forecast and prepare output for the seasons. Miscalculations of production, supply, demand and transport alone can trigger increases. Toss in natural disasters from a production area, and you get a terrible outlook.
Locally (Philly, USA, metro area) we have been told to expect 50-75% increases. All the reasons I gave above were given as contributing factors. The biggest is the gulf region hurricanes.
Also, don’t forget that in many cases natural gas is used instead of oil (my GF’s family replaced, just a few days ago, their oil-fuelled heating with a gas-fuelled one). As oil prices increase, people start substituting oil wirh gas. Gas demand increases, and prices go up.
I wish I had a cite, but I heard on NPR that a big reason was increased demand, as apparently more electricity producers are switching to gas. Damn I wish I had a cite. Lemme go look.
Well, nothing conclusive, but it seems that demand keeps increasing because natural gas is more in vogue for generating electricity and couple that with a drop in supply due to all of the havoc in the Gulf region, you’ve got a situation where the price is going to rise sharply.
From the Albany Times Union:
“There is concern, however, that more use of natural gas in electricity generation will drive up natural gas prices. The state Public Service Commission says natural gas heating costs are expected to rise between 25 percent and 35 percent this winter, due in part to the increased use of natural gas in electric generation. At the same time, there’s limited supply.”
Here ya go:
http://www.naturalgas.org/business/demand.asp
Thanks for the replies
The increase in demand due to electrical generation would explain rise in prices; but somehow I don’t think it explains the sudden huge increase. Its not like there has been a 50% increase in using natural gas over the past 6 months due to electrical generation…(has it?)
I still would like to find some reliable source that says “these pipelines or processing plants right HERE were damaged during the hurricanes; see the destruction depicted in the pictures.” “This damage results in a X% decrease in supply of natural gas”
I don’t suppose I can find that…
Unless you went here
