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Consumers Paying More As Nat Gas Cash Prices Spike

Tyler Durden's picture





 

Submitted by Joao Peixe via OilPrice.com,

As natural gas prices climb, reaching over $5/mcf again on 4 February, and with an unseasonably cold winter, local utilities say that natural gas customers’ bills are 30-40% higher now than last winter.

Last week, we saw natural gas prices rise above $5 for the first time in three years, then falling back a bit only to rise again on 4 February, with March futures trading above $5.25/mcf—or more than 6%, according to expert trader Dan Dicker.

Customers are footing the bill for higher gas prices and the coldest November-January period in four years in the Midwest and Northeast.

In Omaha, Nebraska, weather has been about 30% colder this year than last, and utility regulatory officials saying that gas use among customers is up while bills are up by 34-38% over last year.

Utilities are paying high prices for gas because demand has been higher and consumption rates at a level that has reduced storage by about 17% over the average of the previous five years.  

In the meantime, there is a great deal of disconnect between cash prices and futures prices for natural gas, with futures trading an increasingly volatile business. While 6 February saw a spike in next-day prices, according to Reuters, 5 February saw natural gas futures fall sharply due to longer-term mild weather forecasts.  

“The futures market appears to be disconnected from key developments occurring in the physical market,” Reuters quoted BNP Paribas analyst Teri Viswanath as saying on 6 February. “Today we witnessed a marked increase in spot prices for every consuming region, suggesting that utilities might be rationing limited inventories by purchasing gas off the market.”

As Dicker noted for The Street, “Low stockpiles caused by sequestration and a rush of domestic exploration and production companies away from natural gas production in favor of shale oil is taking its toll and providing the first real and consistent support of prices since 2007. Suddenly, natural gas markets are vulnerable to price spikes and traders are afraid to be short.”

 


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Fri, 02/07/2014 - 15:34 | Link to Comment slotmouth
slotmouth's picture

But NPR said my bill wouldn't be affected?

Fri, 02/07/2014 - 15:35 | Link to Comment Headbanger
Headbanger's picture

NPR is brain dead.

Fri, 02/07/2014 - 15:44 | Link to Comment pods
pods's picture

My gas prices have been flat for like 2 years. Just started seeing price spikes.  I felt like they were giving it away before.

pods

Fri, 02/07/2014 - 15:56 | Link to Comment HyBrasilian
HyBrasilian's picture

I switched to C3H8  many years ago [for stove cooking] & have it stored in 100 lb, 200 lb, & 40 lb tanks off site... Don't need natty to heat the house [& instead use wood pellets ~ which ~ work in certain instances based on your configuration]

 

The problem with most people is that they're, in a way of saying, 'ALL OR NOTHING'... Usually ~ it's inefficient to be that way... You have to identify your various energy needs, seasonality, & other things, & diversify...

 

~~~

PODS ~ You're in FLA right?... If so, is that 'Constellation'?

Fri, 02/07/2014 - 16:26 | Link to Comment NoDebt
NoDebt's picture

My brother swears by his wood pellet stove.  He was burning wood in his wood stove the last couple years but finally used it all up from the trees he had removed from his back yard.  So he converted over to wood pellets and loves 'em.

I ask him how much he saves vs. not using it and then he starts using a lot of 4 letter words to describe the bills when he's out of town a couple weeks and his wife runs the heater full time.  

Fri, 02/07/2014 - 17:00 | Link to Comment Fedaykinx
Fedaykinx's picture

pelletized wood pulp is an emerging market down here where i live, finally something to help out depressed bulk fiber prices. it'll help create some needed jerbs.

Fri, 02/07/2014 - 17:32 | Link to Comment 0b1knob
0b1knob's picture

Not my problem not my fault and I don't care.   In fact since I own some natural gas stocks I'm enjoying the increased diviends and capital gains.

I don't care if the muppets freeze to death in the dark and civilization ends as long as I get my cut.

Fri, 02/07/2014 - 19:04 | Link to Comment Boris Alatovkrap
Boris Alatovkrap's picture

Follow success in Copper ore extraction, Boris is explore Natural Gas. Preliminary research is show large natural gas deposit nearby, and is coincidence, in close proximity of Kaliningrad pipeline. Boris is only need acquisition of harden metal bit and industrial drill.

Fri, 02/07/2014 - 19:06 | Link to Comment BeagleOne
BeagleOne's picture

LOL

Fri, 02/07/2014 - 16:43 | Link to Comment pods
pods's picture

Little further up 95 in NC.

Put in a supplementary propane stove after the ice storm of '02.  I like the warmth of the fireplace. Heat pump just isn't warming in the winter.

Wood stove would be my favorite, but won't suit me at the moment.

pods

Fri, 02/07/2014 - 17:20 | Link to Comment HyBrasilian
HyBrasilian's picture

@pods

 

Yeah, I hear ya...

That's basically the way it goes... It's almost useless trying to discuss the subject on an open forum because the BEST solution [for the individual], is ultimately dependent on:

- their individual 'SPACE' configurations

- the price & availability of various fuels in their local market

- their STORAGE [including 'safety'] needs of such fuels

- etc.

 

One can only really experiment [for themselves] what works for them...

Fri, 02/07/2014 - 15:44 | Link to Comment whatsinaname
whatsinaname's picture

This oughta be good for the coal mining companies too. Many in the dump now the get rid if coal mantra wont work atelast this winter.

Fri, 02/07/2014 - 15:49 | Link to Comment PersonalRespons...
PersonalResponsibility's picture

OT: Blythe Masters

The master is not too worried about anything... 

blithe adjective    
  1. 1. showing a casual and cheerful indifference considered to be callous or improper. "a blithe disregard for the rules of the road" synonyms: casualindifferentunconcernedunworrieduntroubleduncaring,carelessheedlessthoughtlessMore

It's almost as if the name is made-up.

Fri, 02/07/2014 - 16:10 | Link to Comment misterkel
misterkel's picture

Read Gold Wars: Battle for the Global Economy from Clarity Press.

Fri, 02/07/2014 - 15:36 | Link to Comment HyBrasilian
HyBrasilian's picture

Unfortunately ~ the 'free shit' army can't keep their keisters warm [unless they sit on their Obamafones]...

 

Look on the bright side... Go *LONG* 55 gallon steel drums & 2x4 scraps pulled off rotting building frames...

Fri, 02/07/2014 - 15:50 | Link to Comment Fidel Sarcastro
Fidel Sarcastro's picture

We are NOT paying more...the Fed said so.

Fri, 02/07/2014 - 15:36 | Link to Comment Fish Gone Bad
Fish Gone Bad's picture

That global warming thing is working out well.  Not.

Fri, 02/07/2014 - 15:35 | Link to Comment LibertyBear
LibertyBear's picture

Bear do not need natural gas. Bear has natural energy, hibernation and ZP energy generator.

Fri, 02/07/2014 - 15:39 | Link to Comment Rainman
Rainman's picture

Now they can ditch the death panel idea .... Granny gonna be icicled in 62 degrees.

Fri, 02/07/2014 - 15:39 | Link to Comment ATM
ATM's picture

Where all that Marcellus Shale gas?

Fri, 02/07/2014 - 16:51 | Link to Comment pods
pods's picture

Still under my parents property.  NY will okay drilling about a year after everything collapses and we are all in assless chaps and power our "barter" towns on pig shit.

My thoughts on large scale drilling in the US is that they do not want to allow that otherwise all this funny $$ being printed stays here and we all wear bread helmets along with our assless chaps when the inflation roars along.

OT:  I seem to have a fixation with assless chaps?  Note to self, do not see shrink. Some things are better left unknown.

pods

Fri, 02/07/2014 - 16:53 | Link to Comment Fedaykinx
Fedaykinx's picture

NY will never allow fracking, there's too many neoluddite chicken littles up there.  kinda like ZH, now that i think about it.

Sat, 02/08/2014 - 01:19 | Link to Comment Flakmeister
Flakmeister's picture

Shitting in your own crib is fine when it is 20 country yokels in the middle of nowhere, doing it in the watershed for 20 million people is another story....

Sat, 02/08/2014 - 16:26 | Link to Comment Ident 7777 economy
Ident 7777 economy's picture

-1

"Neoluddite chicken little" NIMBY.

 



Fri, 02/07/2014 - 16:59 | Link to Comment Citxmech
Citxmech's picture

It's OK.  Embrace your inner Wez.

Fri, 02/07/2014 - 15:40 | Link to Comment firstdivision
firstdivision's picture

Not to worry.  Once consumers bills go up, FERC/DC steps in and crushes the evil speculators. 

Fri, 02/07/2014 - 15:40 | Link to Comment blindman
blindman's picture

financial markets are the trojan horse
that never stops kicking you in the balls.

Fri, 02/07/2014 - 15:49 | Link to Comment ejmoosa
ejmoosa's picture

We'll seasonally adjust that noise out of the equation...

NO INFLATION FOR YOU!

Fri, 02/07/2014 - 16:13 | Link to Comment ejmoosa
ejmoosa's picture

There's no inflation for me with natural gas this year, to be honest.  I locked in at .486 for a year.  

But just a nickel increase next year and my natural gas prices will have risen by 10%.  I am expecting it to be much more than that, however.

Fri, 02/07/2014 - 15:50 | Link to Comment Galts Disciple
Galts Disciple's picture

There's no inflation, no. I'm paying more to heat my house, more to fill my car, and more at the grocery store. Oh and have you priced a new car lately? And don't forget all the inflation that has found its way into the stock markets. But other than that everything is great. I am so sick of being lied to everyday. I wish the collapse would just hurry up and happen so we can flush all the crap. 2008 should have done it but the criminals running the world couldn't leave things alone, they had to jump in and be the saviors. Well just because you saved a turd from being flushed down the toilet that does not make you Jesus Christ.

Fri, 02/07/2014 - 15:56 | Link to Comment roadhazard
roadhazard's picture

I thought America was awash in Nat Gas. Time to gouge the consumer, again.

Fri, 02/07/2014 - 16:14 | Link to Comment Volkodav
Volkodav's picture

Da MSM told you that..so you know it true in real...

Fri, 02/07/2014 - 16:51 | Link to Comment Fedaykinx
Fedaykinx's picture

yeah it was $13 per mcf not 4 years ago.

Fri, 02/07/2014 - 21:39 | Link to Comment adr
adr's picture

And my father in law set the house at 55° because any more than that would have run him $350+ to heat his home a month. 

Sat, 02/08/2014 - 01:21 | Link to Comment Flakmeister
Flakmeister's picture

As I have pointed out for almost 4 years here...

The US is still a net importer of natural gas....

Sat, 02/08/2014 - 16:28 | Link to Comment Ident 7777 economy
Ident 7777 economy's picture

... artful use of non-disclosure; why don't you specify from which countries we import? 

Sat, 02/08/2014 - 18:17 | Link to Comment cdmoore125
cdmoore125's picture

Distrigas in Boston imports natural gas, much from Atlantic LNG. They source a lot from Trinidad & Yemen. The U.S. does not export natural gas to any country but Mexico, and won't until late 2015 at the earliest.

Sat, 02/08/2014 - 19:09 | Link to Comment Ident 7777 economy
Ident 7777 economy's picture

Flux said we are 'net importers'; my question still is: from whom?

Sat, 02/08/2014 - 19:15 | Link to Comment Flakmeister
Flakmeister's picture

Why don't you look it up...

Google EIA US Natural Gas imports by country

Fri, 02/07/2014 - 16:01 | Link to Comment DavrosoftheDaleks
DavrosoftheDaleks's picture

30% colder in Omaha is proof even mother nature doesn't like Buffett.

Fri, 02/07/2014 - 19:08 | Link to Comment BeagleOne
BeagleOne's picture

Finally, someone finally spells his name correctly...(snark)

Fri, 02/07/2014 - 16:02 | Link to Comment uncle_vito
uncle_vito's picture

Used 2750 gallons of propane in my wind machines to keep my orange groves from freezing last month in Calif.   Only had to pay $2.33 per gallon.   Guess I got lucky or the vendors know not to gouge the customer.   That way the vendor keeps the customer year after year.

Fri, 02/07/2014 - 16:11 | Link to Comment Volkodav
Volkodav's picture

How much is propane price higher?  From last year or recent low?

Fri, 02/07/2014 - 16:31 | Link to Comment LMAOLORI
LMAOLORI's picture

 

The highest I ever, ever paid (WI) when we had propane was $2.29 so we got rid of it that was 2 years ago. But it really depends on your specific location for how much it has increased. My little brother lives in N. Dakota and prices there have tripled in the last few months.

Fri, 02/07/2014 - 16:05 | Link to Comment Rock On Roger
Rock On Roger's picture

This NG action this week showws what happens when the beach ball gets held under water for too long.

The first manipulated commodity to break free?

Burn gaz bitchez.

Stack On

Fri, 02/07/2014 - 16:58 | Link to Comment Fedaykinx
Fedaykinx's picture

i wouldn't start celebrating yet, it's under $5 and we're headed into the shoulder season.  add to that when you start getting above $4.50 lots and lots of shut in production starts getting opened up.  once the weather warms we'll see, i guess.  hope for a hot summer.  /shrug

Sat, 02/08/2014 - 18:21 | Link to Comment cdmoore125
cdmoore125's picture

Right on. The forward curves haven't moved at all (Cal '15, '16+) as producers with shut-in production sell into any future strength.

Fri, 02/07/2014 - 16:06 | Link to Comment denverdolomte
denverdolomte's picture

Wow, I feel so lucky. Here in Colorado we have Xcel Energy as the only real provider of gas/electric. I love that I am using less energy compared to last year. Last year January bill was $230 compared to $386 this January. I though it was only natural for the price increase, especially with no other options for energy. 

Fri, 02/07/2014 - 16:13 | Link to Comment Rukeysers Ghost
Rukeysers Ghost's picture

Higher energy usage for the consumer because more people are sitting at home now, out of work enjoying thier new found freedom. Thank you Obamacare.

Fri, 02/07/2014 - 18:35 | Link to Comment MrBoompi
MrBoompi's picture

As bad as Obamacare is, it has nothing to do with the fucking price of natural gas or the increased demand.  You Republicans are like a goddamn broken record.  If you don't like Obamacare, tell your reps to write a bill for single-payer.

Fri, 02/07/2014 - 18:40 | Link to Comment FredFlintstone
FredFlintstone's picture

Single-payer, what a douche.

Sat, 02/08/2014 - 01:22 | Link to Comment Flakmeister
Flakmeister's picture

So you are ok with the health insurance industry taking a vig equal to 5% of GDP then? About the same as Wall street...

I mean if they were providing superior outcomes, then ok, maybe, but they ain't.... 

Fri, 02/07/2014 - 16:16 | Link to Comment Volkodav
Volkodav's picture

Go long chainsaws...

Fri, 02/07/2014 - 16:21 | Link to Comment Caracalla
Caracalla's picture

Shorting NatGas is the easiest play around right now.  It is hugely overbought and once the weather moderates, prices will collapse.  If you want to make money right now buy some NatGas ETF puts, some DGAZ and, welll......BTFD on everything else.

Fri, 02/07/2014 - 17:06 | Link to Comment samsara
samsara's picture

"...natural gas customers’ bills are 30-40% higher now than last winter."

Impossible.  We're gonna be the next Saudi Arabia !  We're Exporting energy....

Fracking will flood the market it will be too cheap to meter....

/sarc

 

Sat, 02/08/2014 - 01:25 | Link to Comment Flakmeister
Flakmeister's picture

no need for the /sarc... it was plenty clear...

Fri, 02/07/2014 - 17:39 | Link to Comment kurt
kurt's picture

They placed their bets. The cloud seeding orders went out after the weather model was built. The maximum period of chemtrailing was on or about the date the California Governor announced the California Drought. A complete success for the insiders and a great big fuck-y'all to the outsiders and the consuming public.

Sat, 02/08/2014 - 16:34 | Link to Comment Ident 7777 economy
Ident 7777 economy's picture

 

 

 

" The cloud seeding orders went out after the weather model was built. "

 

Who provides 'the clouds'? A little tough to seed dry, clear air ... 

Fri, 02/07/2014 - 18:13 | Link to Comment secretargentman
secretargentman's picture

Is it normal for natural gas suppliers in the US to change the price they charge without actually telling anyone until the bill arrives? Seems like price should be upfront if it's going to do its job in reducing demand.

Sat, 02/08/2014 - 18:25 | Link to Comment cdmoore125
cdmoore125's picture

My utility publishes their rate at the beginning of each month (after bid week and IFERC) and many states have deregulated natural gas markets. You can buy from one of those and lock in your price.

Fri, 02/07/2014 - 18:30 | Link to Comment MrBoompi
MrBoompi's picture

I'm sure the Commodities Futures Modernization Act, along with the speculators like Goldman and JPM, have nothing to do with the 40% price increase.

Fri, 02/07/2014 - 20:06 | Link to Comment Rainman
Rainman's picture

+++ for remembering CFMA 2000

Fri, 02/07/2014 - 18:52 | Link to Comment blindman
blindman's picture

Kicking Back In Amsterdam - Kevin Welch
http://www.youtube.com/watch?v=pQjnTlWiKbU

Fri, 02/07/2014 - 19:07 | Link to Comment MarcusAurelius
MarcusAurelius's picture

Gas prices are likely too low. If you look back over the past when gas prices spiked to their highs it was essentially when most people were converting over as a result of Oil being too high. I am certainly in favor of a free market but this always seems to happen when demand goes up which is a natural consequence of such action. However I am not in favor of artificially jacked prices so that companies can max their profits on the back of consumers once they have them by the short curly's for switching over or for governments to collect more "hidden tax" revenues which only a moron couldn't see through. 

No question you are dammed if you do and dammed if you don't when it comes to choosing between oil and gas but there is a real assault going on here against our freedoms and it pisses me off. That is unless you own an oil or gas company? 

Fri, 02/07/2014 - 20:56 | Link to Comment Dewey Cheatum Howe
Dewey Cheatum Howe's picture

That is only 30% - 40% on the gas itself. They itemize the bill between delivery and cost of gas and those are broken down even further. That 30% - 40% isn't applied to the total bill unlike home heating oil. 

Sat, 02/08/2014 - 01:10 | Link to Comment ricky663
ricky663's picture

Relocated from N. Nevada to S. Thailand in November 2012.
In NV, during some periods of the the winter, the temperature would not go above 18F. We would have to leave the furnace on all the time for the critters and plants. We would end up pay $2000+ / year for propane.
Here in S. Thailand, the temperature never goes below 70F. Home heating cost savings = $2000+ / year (not figuring in the ~30% price spike in Jan 2014).
Do you think inflation will "remain stable" forever, and the corporations will "hold their prices" and thus reduce their profitability? Fat chance.
It's going to get much pricier to stay in the west boys. I recommend you get out and position yourself carefully (no debt) so you can "make it to the finish line" in comfort.

Fri, 02/07/2014 - 22:53 | Link to Comment SmittyinLA
SmittyinLA's picture

Gas prices are artificially low right now because producers want to remove export restrictions.

The truth is far more sinister, from the horses mouth http://blogs.wsj.com/corporate-intelligence/2014/02/03/regulators-ask-ex...

Exxon’s answer to the SEC boils down to this: Yes, low gas prices hurt in 2012, but the pain was fleeting and the future looks a lot better.

To put a value on wells that pump oil and gas for decades, Exxon argued in its response to the SEC, it has to factor in things that haven’t happened yet. For instance, Exxon pointed out that the U.S. is poised to export a significant amount of natural gas overseas, which could boost prices for the fuel.

Forget that "hundreds of years of gas" bullshit, they can sell a hundred years of gas in 10 years.


Sat, 02/08/2014 - 00:52 | Link to Comment Notarocketscientist
Notarocketscientist's picture

High energy prices = less consumption because everything including the fuel in your tank costs more = layoffs = less tax revenue = government cutbacks, layoffs and debt increases = less consumption = more layoffs = less taxes =====  economic death spiral.

 

Compounding the problem is the fact that a weak labour market means real wages drop - as they are across the world right now - that means everything is more expensive and your buying power is dropping at the same time.

 

Governments recognize this and are trying to offset with debt, easy lending (they are purposely inflating bubbles), lower interest rates and money printing.

 

Of course they will fail - because the disease is expensive oil.  And there is no substitute

 

The economic death spiral will accelerate when the QE and ZIRP no longer have any effect and the confidence game collapses.

 

This moment will be known as the end of the industrial revolution by the few who survive.

Sat, 02/08/2014 - 06:56 | Link to Comment 22winmag
22winmag's picture

A two pack of 1.1 pound propane cylinders at WalMart just jumped from $5.37 to $6.57.

 

That's a 20%+ increase overnight.

Sat, 02/08/2014 - 19:15 | Link to Comment Flakmeister
Flakmeister's picture

If most people were unaware of subtleties in the US oil market, it is very clear that they are completely oblivious of the propane market....

While there were shortages in the midwest, we exported ~400,000 barrels a day (which was counted as "oil" production) because there is no infrastructure to move the propane around...

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