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Gas For A Buck

Tyler Durden's picture


No, not the kind you actually use in your car. The other kind: that which Europe would kill to be able to get at even a 500% higher price. From a peak at $15.78 in Q4 2005, Natural Gas (front-month futures) has now fallen to a lowly $1 handle for the first time since Q1 2002 on its way perhaps to its all-time low of $1.02 in Q1 1992 as it drops for the sixth quarter in a row.

Chart: Bloomberg


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Wed, 04/11/2012 - 13:36 | 2335035 GeneMarchbanks
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Where it will be a 'buy'...

Wed, 04/11/2012 - 13:39 | 2335039 CPL
CPL's picture

For the low low cost of retro fitting your car for the cost of a new car you can drive on NG for 1/4 the distance with no take off speed as well.


There's a reason meter maids use NG in their putt putts and cops use high octane gas.


Where it will be a buy is .23 cents

Wed, 04/11/2012 - 13:40 | 2335047 Tsunami Wave
Tsunami Wave's picture

I was listening to Rick Santelli on King World News over the weekend about this.. there is no reason not to use natural gas in cars and just about everything else.  However for one bizarre reason or another, some people or companies mysteriously don't want to use that.

Wed, 04/11/2012 - 13:43 | 2335059 Mr Lennon Hendrix
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Yeah!  And when your car crashes the explosion will look super cool!

Wed, 04/11/2012 - 13:45 | 2335069 drink or die
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Cause gasoline is non-flammable and doesn't take way longer to dissipate than natural gas?

Wed, 04/11/2012 - 13:58 | 2335123 slewie the pi-rat
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it will be a buy when bob_ dabbaadabbadoo says it's a buy!

Wed, 04/11/2012 - 14:32 | 2335240 the mad hatter
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This is what the mad hatter drives. Costs 1.90 per GGE to fill up. So yes you can drive your car with it.

Wed, 04/11/2012 - 14:53 | 2335420 rotagen
rotagen's picture

Been looking into this myself, but the where's the price tag at?  And since I never buy a new car (are you nuts), it's hard to find a used NG burner.


And I need something bigger.


If only global warming had the same effect on real gas prices.

Wed, 04/11/2012 - 17:00 | 2335925 CrazyCooter
CrazyCooter's picture

Taking a gasoline vehicle and coverting to bi-fuel is the way to go. I looked into this, but it turns out that each make/model/year has to have its own design, which requires EPA approval (in the US). Assuming fuel injection with a design already exists, its 10k or something to convert. Not so cost effective. Now, if you go with an older cauberated vehicle, its a lot cheaper. Or you can buy a new model bi-fuel. Ford used to make bi-fuel trucks (government use IIRC) so you can buy them used, although they are likely high mileage now.

I would never buy a CNG only vehicle, I would rather have a choice.

Anyway, gas prices are NOT staying down. I rant about this here ... (and link to a good post over on ...



Wed, 04/11/2012 - 17:22 | 2335983 Flakmeister
Flakmeister's picture

Yes... it is about cash flow (and keeping leases from expiring)....

There is going to be an epic flushout of the overlevered.... I saw a report that the shale NG drillers/producers have a $40 billion annual capital  deficit....

Wed, 04/11/2012 - 14:23 | 2335236 max2205
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Everyone remembers when it was a good idea at $1.00 but then it went to $15.  Not that Oil is stable but.....

Wed, 04/11/2012 - 14:18 | 2335197 slewie the pi-rat
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they use it here for a the public trans and some of the city&county vehicles

i've heard that it is a fairly ez conversion

i would imagine it is somewhat like propane; you hafta be trained;  it takes fifteen minutes, and then you hafta do it a few times;  then you know how to fill a tank

i know how explosive propane is:  there have been explosions from people opening a vehicle door and the courtesy light goes on

fightClub has a great gas explosion!  refrigerator went on, i!

Wed, 04/11/2012 - 14:28 | 2335275 vast-dom
vast-dom's picture

MR. LH is correct. See below for more.

Wed, 04/11/2012 - 13:47 | 2335071 DCFusor
DCFusor's picture

Unlike gasoline, natgas has to be compressed, which means leak more or less equals explosion.  The low energy density as pointed out above is also an issue, along with the fact that using a gaseous fuel effectively removes cubic inches from diisplacement compared to a liquid.

If someone wanted to learn to reverse-crack natgas into heavier molecules (there'd be hydrogen left over, which has value on its own), you'd have something - see, I just gave away a billion dollar idea.  You saw it here first, and this establishes prior art so no one can patent of win a suit over it.

On the other hand, if I was charging my Volt off the power company, 44 miles range would cost me about $1.20 - so pretty close to gas for a buck.  As it is - I'm charging mine of PV panels I own.

Wed, 04/11/2012 - 13:51 | 2335093 drink or die
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Natural gas is liquid until it is put into the cylinders, at which point it becomes a gas.  Gasoline is exactly the same, it is vaporized when mixed with air and put into the cylinders.

Wed, 04/11/2012 - 13:54 | 2335104 Broccoli
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No, gasoline is a liquid at room temperature and 1 atmosphere.

Natural gas is a gas at room temperature and 1 atmosphere. It has to be compressed to high pressures for it to be in the liquid phase, or it has to be cooled to cryogenic temperatures.

Wed, 04/11/2012 - 13:57 | 2335121 drink or die
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My point is that it is stored as a liquid or a compressed gas in the car until the time of combustion, similar to gasoline. The point that the original psoter was trying to make was inaccurate.

Wed, 04/11/2012 - 14:11 | 2335185 Flakmeister
Flakmeister's picture

CNG is sure as hell not stored as a liquid.....

Wed, 04/11/2012 - 14:17 | 2335206 CrashisOptimistic
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FYI Flakdood . . .

My calculations suggest 30% of nat gas coming out of the ground is reqd to provide the power to refrigerate to LNG form.  Even though the conversation is about CNG, reality is you can't convey CNG at transportation fueling quantities at 500 psi.  It would not flow fast enough.  So either 4000 psi pipes or LNG carriers are reqd.

You would have to pressurize pipes to 4000 psi to transport to filling stations and the leakage at 4000 psi on literally hundreds of thousands of miles of pipe to each filling station (in such a transportation infrastructure transition) would cost about 15% of total Per Day.

A transition of all transport to nat gas would likely deplete reserves in less than 20 years.

Wed, 04/11/2012 - 14:24 | 2335245 Flakmeister
Flakmeister's picture

IIRC, 30% is a bit high...

I can't wait for the price to rise when LNG exports corresponding to ~5% of production start kicking in 2015 or so...

Wed, 04/11/2012 - 14:45 | 2335305 Manthong
Manthong's picture

LNG is what we export when we freeze NG and put it into big floating refrigerated thermos bottles and ship it to Japan.

CNG is what some smart and/or fortunate people do to NG by compressing it to use for running engines where economical or necessary.

Wed, 04/11/2012 - 14:11 | 2335189 Broccoli
Broccoli's picture

No he is completely accurate. It is you who are inaccurate. It is a completely different hazard than gasoline. Gasoline, unless it is preheated and unable to flash to gas, will not explode. (IE it enters the superheated phase which would take a very rare set of circumstances.) It will simply burn. Moreover, your fuel tank is basically open to the atmosphere. There is no pressure containment.

As soon as you loose pressure containment in a CNG car, you will instantly have an explosive vapor cloud immediately around the car that can be set off by things as simple as your own car engine, cell phone, windshield wiper motors (if they are going it will cause an explosion), powered windows, etc. An explosion is likely.

Though, in countries like Brazil that have a high percentage of CNG cars, explosions are unlikely because your CNG bottle is designed with large safety factors and is unlikeley to be compromised in a crash. That doesn't change the fact that CNG is inherently much more dangerous than gasoline. The hazardous nature of CNG does not bother me suitably controlled, but as an engineer I feel a strange compulsion to correct inaccurate science.

Thu, 07/19/2012 - 01:26 | 2622988 rajonmestra
rajonmestra's picture


you're right about that. gasolines do not explode unless confined on a good casing. hence, cars with quality gas tanks should not be bothered by this issue. if you know that you have a good brand then you can relax already. still, you are not excused from the issue of gas price increase. i have just bought discounted oil pans, alternators and other car parts then the gasoline price just rose immediately. seems that the discounter parts i got were useless.

Wed, 04/11/2012 - 14:23 | 2335226 Obaminator
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Drink or Die: Your missing the science here. Not to be mean, but your trying to equate gasoline converting to a vapor with natural gas is not accurate.

Gasoline takes up "X" amount of space, say 1cc per cycle, in a piston with say 500 cc's of volume. That gasoline vaporizes due to a lower initial atmospheric pressure in the cylinder during the intake stroke, plus the heat of the engine, as gasoline vaporizes it MIXES with the intake air, becoming an explosive mixture.

Natural Gas, expanding at over 1000:1 in a microsecond displaces the air availbe to be drawn into the cylinder, and without air, natural gas is not explosive because it doesnt have oxygen to ignite. in essence what you get is far less BTU per stroke with NG than Gasoline due to the difference in volume that the NG must occupy versus the gasoline vaporizes (basically discolving) into the air.

Gasoline has far more BTU per "expanded" volume that does NG, and being a liquid disolving into air, versus a gas displacing another gas leads to them not being comparable.

Two completely different physical properties leading to significantly diffeernt chemical reactions of energy output.


Wed, 04/11/2012 - 14:59 | 2335450 DCFusor
DCFusor's picture

Sorry, man, just like with propane (a liquid while in the tank) natgas is a gas when it goes through the conversion carb, or it is in all the conversions I've seen.  Maybe DoChen will chime in as he has some experience with natgas conversions in Peru where he does business.  I do energy related science for a living - I'm not always right, but most of the paycheck depends on it.

Wed, 04/11/2012 - 13:56 | 2335116 The Swedish Chef
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At room temerature natural gas is a liquid until it decompresses and vaporizes, something that happens in 0.0001 seconds. Why do you think it´s called natural gas?


For gasoline it takes a lot, A LOT, longer for the same amount of liquid to vaporize.

Wed, 04/11/2012 - 18:46 | 2336217 FeralSerf
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Unless you live in a very cold room, natural gas (methane) is never a liquid at normal room temperature of about 20 degrees C.  The critical point of methane is 190.7 degrees Kelvin (about negative 82 degrees C) at  45.8 atmospheres or about 673 psi.

Wed, 04/11/2012 - 13:51 | 2335095 Broccoli
Broccoli's picture

They already do this and it is even being considered in Louisiana. The main hurdle is it costs as much if not more than a full scale refinery and Asia and Europe have really good nat gas markets, so there is no need to convert.

Wed, 04/11/2012 - 13:54 | 2335108 dow2000
dow2000's picture

wow you're awesome

Wed, 04/11/2012 - 14:05 | 2335156 marathonman
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Natural gas can be fairly easily converted to methanol using standard industrial technology.  Heat makes CO/H2 which react over catalyst to make CH3OH.  Methanol is a decent liquid fuel althogh it is less energy dense than ethanol so mpg's won't be as good as gasoline.  But it's doable and with methanol to olefins technology, you can make any length molecule you want.  Turn it all into diesel and you've got a great no sulfur energy dense liquid fuel.  It's all doable today with current industrial technology.  The economics just have to work right though.  We're probably getting pretty close.  Check out the book 'The Methanol Economy' for a good discussion on the viable future of energy via methanol:

Wed, 04/11/2012 - 15:00 | 2335463 DCFusor
DCFusor's picture

Greened ya.  Yeah, the energy balance net is the key here.

Wed, 04/11/2012 - 13:48 | 2335078 lizzy36
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Fossil Fuel.

Much better for Obama to continue to push Solyndra type entites.

Also do not discount the adminstration WANTING nattie to fall under a $1. This is part of their "re-shoring" of jobs strategy. VERY VERY CHEAP natural gas for manufacturing plants.

Wed, 04/11/2012 - 13:55 | 2335096 Mr Lennon Hendrix
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Much better for Obama to continue to push Solyndra type entites.

Over a cliff you mean.  Obama single handedly destoryed the PR of the solar industry by investing tax payer money (which is stupid in the first place because the government should not be investing in the private sector) in its shittiest companies.

Wed, 04/11/2012 - 14:18 | 2335221 Matt
Matt's picture

+1. arrows are disabled because you started post with italics (at least that's the current theory).

Wed, 04/11/2012 - 14:36 | 2335335 slewie the pi-rat
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...whose assets are now/will soon be owned by the fuking banksters...  b/c we got hosed.  again

then we'll get some EZ solar finacing, i'll bet...

Wed, 04/11/2012 - 14:22 | 2335233 Bobbyrib
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Obama couldn't give a shit one way or the other if manufacturing comes back to the US.

Wed, 04/11/2012 - 14:31 | 2335290 Cursive
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And I'm still paying 10 to 11 cents per kw for my electricity. Yeah, letting monopolies run whole industries is a great idea.

Wed, 04/11/2012 - 14:07 | 2335167 CrashisOptimistic
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The mysterious reason is that the tanks are pressurized to 3600 psi.  1 Atmosphere ambient is 14.7 psi.  The pipes to your house are 500 psi. 

How did you plan to fill your tank?  A nat gas filling station has to have a $10,000 compressor to get the pressure up.

Look, there's no magic.  It's physics.  Nat Gas has 1/1000th the BTUs on a volume basis (like 1 barrel or 1 gallon) of crude.

There is only one nat gas production car in the US of note.  The Honda Civic.  It has essentially no trunk so they could get more volume in their fuel tank, which is at 3500 psi.  

With the pressure, and with that tripled tank size, they still get only 40% of the range of a conventional Civic on a tank of fuel.

It Doesn't Work.  

The examples you see are all bullshit garbage trucks that travel some short distance and then get refilled.

Wed, 04/11/2012 - 14:15 | 2335202 Flakmeister
Flakmeister's picture


CNG works for short range commercial fleets.... it will not work for the vast majority of people...

I will also bet dollars to dougnuts that only a small fraction of people that shell out the rquired $5-10,000 for a conversion will ever reap their CAPEX back....

Wed, 04/11/2012 - 18:52 | 2336238 FeralSerf
FeralSerf's picture

I doubt Doug's nuts are worth a dollar to anyone but Doug.

Do you really believe that all those Peruvians that use natgas for their cars spent $5 to $10K for the conversion?

Wed, 04/11/2012 - 19:12 | 2336300 Flakmeister
Flakmeister's picture

Sue me for missing the h....

It's the price I heard from Santellli (broadcasting from some conversion outfit in OK) The price also presumes one buys a compressor for home fueling and a good quality tank....

I am sure that doing retro-conversions on existing vehicles is more expensive that buying a CNG enabled car from the get go which might explain Peru...

I will stand by my statement that CNG really only makes sense for short range commercial fleets and that for the most part is not suitable for the majority of drivers...

Wed, 04/11/2012 - 20:49 | 2336536 FeralSerf
FeralSerf's picture

I'd love to sue you if there was any money in it, which I doubt, but what does that have to do with "h"?

Or did you mean:'s_Donuts ?

Wed, 04/11/2012 - 14:26 | 2335252 Obaminator
Obaminator's picture

Ahhh C'mon now...calling those public-servant garbage truck bullshit is a tad harsh isnt it?    NOT! HAHA

Wed, 04/11/2012 - 14:36 | 2335341 Flakmeister
Flakmeister's picture

Let me guess... Do you burn your garbage in a barrel in your front yard?

Wed, 04/11/2012 - 16:26 | 2335818 Id fight Gandhi
Id fight Gandhi's picture

The civic has home phill stations that gas it up overnight. Filling stations are quicker. The home stations without a compression aren't that expensive.

The solution is a dual fuel running gasoline too. Screw this hybrid battery stuff.

Thu, 04/12/2012 - 08:04 | 2337183 Flakmeister
Flakmeister's picture

So effectively, you will pay extra (degraded mileage) to schlep two heavy fuel tanks around....

Wed, 04/11/2012 - 16:51 | 2335909 css1971
css1971's picture

Taxis here run on Erdgas.

Wed, 04/11/2012 - 18:24 | 2336118 earleflorida
earleflorida's picture

'nat gas' coversion kits can switch to gasoline with a push of a bottom [thankyou Rickster!/CNBC] --- the entrepreneurship is growing exponentially, and the future looks bright --- not even the, *capitalist-oligopoly-regulation [hijacked, and sequestered america's innovation and entrepreneurship -- the true meaning of capitalism]*, can slow this train down, period!           Note:  click on 2012 Fuel Economy Guide**

___ Note: Honda GW @ 170 m/tank? 

Wed, 04/11/2012 - 14:45 | 2335384 aerojet
aerojet's picture

I'm thinking energy density--you can run a car on pure ethanol, but you're going to burn a lot more of it.

Wed, 04/11/2012 - 15:54 | 2335700 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

The other problem with ethanol is it can't be transported in pipes like oil since is will pick up water.

Wed, 04/11/2012 - 15:18 | 2335527 zanza
zanza's picture

The reason is because the high pressure tanks needed are very expensive as NG runs at much higher PSI compared to gasoline.

Wed, 04/11/2012 - 13:46 | 2335070 Steaming_Wookie_Doo
Steaming_Wookie_Doo's picture

Had a friend who bought a Crown Vic that runs on NG that was ex-state of Calif. Seems to do quite well with it. He surfs the carpool lane at about 80 mph. Car's black, I'm assuming he never gets pulled over because he looks like an undercover cop or a Fed.

Wed, 04/11/2012 - 13:47 | 2335074 HelluvaEngineer
HelluvaEngineer's picture

Why is no one installing gas powered electric turbines?  Am I missing something obvious, other than my $350 summer electric bills?

Wed, 04/11/2012 - 14:16 | 2335208 Clycntct
Clycntct's picture

I thought I knew some of the answers so I checked and

And lots more reading with the question I plugged in"List of natural gas powered generating plants built in the last 5 years"

And my ? not postable start page search shows "About 1,239,168 results (0.08 seconds)"

Start page untrackable is the reason it won't post it's page.

Wed, 04/11/2012 - 14:16 | 2335207 HarryM
HarryM's picture

DODGE and GM are alledgedly producing bi-fuel pickups that switch seamlessly between the 2 fuels.

At current prices, estimates are it would cost  around $1.45 per Gasoline Gallon Equivalent


Would be nice to see some competition for the oil cartels

Wed, 04/11/2012 - 15:17 | 2335518 HelluvaEngineer
HelluvaEngineer's picture

Only for the heavy duty trucks.  No thanks.

Wed, 04/11/2012 - 14:32 | 2335292 HarryM
HarryM's picture

In the meantime - ocean shipping rates are getting jacked up due to fuel increases


Get ready to pay more for everything

Wed, 04/11/2012 - 19:40 | 2336372 mophead
mophead's picture


Wed, 04/11/2012 - 13:53 | 2335106 Cinfultreat
Cinfultreat's picture

Where is Obamas shit shovel ready car!

Wed, 04/11/2012 - 14:08 | 2335175 nonclaim
nonclaim's picture

Well, it would be smart to use an ox cart and sell the by-product to Obama. Or, if truly a patriot, you could do your part and deliver it free to the WH gates...

Wed, 04/11/2012 - 15:59 | 2335723 whatsinaname
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Wonder if this is severely deflationary for the broader economy (by consequence) and if this is having an impact on NG companies' bottom lines ? Is CHK CEO panicking and are many others ?

Wed, 04/11/2012 - 16:23 | 2335804 Sequitur
Sequitur's picture

I love natural gas. I'm pleased America produces it and it is available for low cost. We use natural gas for cooking, where it is far, far better than electric ranges and those abominable flat-top cook ranges. Natural gas also heats our water and home, and we have a natural gas fireplace. Burns clean, no soot, no offensive fumes. Really love it.

I wish there were some good luxury sedans that allow one to seamlessly switch between natural gas and gasoline. Because I'd buy one today and use natural gas whenever I could.

Anyway, I think the natural gas "glut" is bullish for the United States, because we have an abundance of a cheap fuel that burns clean and can power all sorts of shit: cars, power plants, and homes for heating, cooking, and hot water. Now, about that $16 trillion in goddamn debt . . . .

Wed, 04/11/2012 - 13:36 | 2335036 fightthepower
fightthepower's picture

Fuck you Bernanke!

Wed, 04/11/2012 - 14:09 | 2335148 derek_vineyard
derek_vineyard's picture

you forgot liesman, pisani, kudlow and cramer

brian sullivan is on the road to getting canned by refuting the above XXXX suckers on a regular basis (santelli should mentor him)

Wed, 04/11/2012 - 13:39 | 2335040 Dr. Engali
Dr. Engali's picture

Looks like a place to put some money to work.

Wed, 04/11/2012 - 13:58 | 2335122 derek_vineyard
derek_vineyard's picture

money to work?  its a mad scramble to preserve capital and minmize loss to inflation.......risk has never been so high in any asset class.   if one could securely take physical possession of a wide basket of commodities and pms, they could feel secure

Wed, 04/11/2012 - 13:40 | 2335044 Diet Coke and F...
Diet Coke and Floozies's picture

I would get in on this if it wasn't for Corzine...

Wed, 04/11/2012 - 13:40 | 2335048 Lost Wages
Lost Wages's picture

I'm using some natural gas today. That should prop the price up until I'm done with laundry.

Wed, 04/11/2012 - 13:42 | 2335058 Dr. Engali
Dr. Engali's picture

I'm using natural gas too...I had pizza for lunch.

Wed, 04/11/2012 - 14:27 | 2335262 SillySalesmanQu...
SillySalesmanQuestion's picture

Beans and cabbage produces gooder natural gas too...

Wed, 04/11/2012 - 14:35 | 2335274 SillySalesmanQu...
SillySalesmanQuestion's picture


Wed, 04/11/2012 - 13:40 | 2335052 NotApplicable
NotApplicable's picture

Wow, that's quite a ramp-up in contract numbers. Lemme guess, JPM amd GS are on the sell side of this collapse?

Wed, 04/11/2012 - 13:43 | 2335053 Stoploss
Stoploss's picture

Don't forget, im sitting on it, your sitting on it, it's everywhere.

There is so much of it, that no market is required.

It is worthless.

The high tech drillers produced themselves right out of the market.

I seen this happen befo.

Wed, 04/11/2012 - 17:47 | 2336064 smiler03
smiler03's picture

Natural Gas is used to provide the UK with 43% of its electricity. Certainly not worthless over here.

Wed, 04/11/2012 - 13:44 | 2335063 surf0766
surf0766's picture

Free heat. The lefties should be all over it. They like free stuff.

Wed, 04/11/2012 - 13:45 | 2335067 The Swedish Chef
The Swedish Chef's picture

In Sweden natgas-stations for cars aren´t common but not rare either. Around 0,5% of all cars here run on natgas. 


On the other hand, this is funny. Drill, baby, drill and we´re gonna rid ourselves of that nasty Arab oil. Work out like a charm....

Wed, 04/11/2012 - 17:26 | 2336008 Flakmeister
Flakmeister's picture

Umm... ok.... let's check back on things in about 18 months....

Wed, 04/11/2012 - 13:47 | 2335073 Shleprock
Shleprock's picture

I just had a $0.99 taco and boy do I have gas!!

Wed, 04/11/2012 - 13:49 | 2335081 non_anon
non_anon's picture


Wed, 04/11/2012 - 13:50 | 2335084 Guns N Metals
Guns N Metals's picture

Yours @ $2.00, $1.50 bid on the follow.

Wed, 04/11/2012 - 13:51 | 2335098 Seasmoke
Seasmoke's picture

for Only $50 , i took out my big oil tank and switched to NG in 2008......boy do i look like a genius !

Wed, 04/11/2012 - 13:53 | 2335101 El Oregonian
El Oregonian's picture

Ass for a buc...? oh, never mind.

Wed, 04/11/2012 - 13:55 | 2335111 slewie the pi-rat
slewie the pi-rat's picture



speaking of natGas, i saw methaneMan here the other day, BiCheZ!

Wed, 04/11/2012 - 13:56 | 2335112 rumblefish
rumblefish's picture

why is natural gas taken such a beating?

what is the best way to play natural gas in either direction?

Wed, 04/11/2012 - 14:01 | 2335133 slewie the pi-rat
slewie the pi-rat's picture

options or spreads, but i don't trade this stuff, so (?)

Wed, 04/11/2012 - 14:08 | 2335171 junkyardjack
junkyardjack's picture

Shale.  They don't have an effective way to turn it into a liquid to transport it so the price of gas is collapsing due to excess supply.  Its not as low in other places across the world, mainly US I believe.  The play I would think would be when do you think that demand will catch up with supply, either companies are able to turn it into LNG cheap enough to transport it out of the US or that companies that are coal burning will find the price cheap enough to convert to gas which I would believe is expensive.

Wed, 04/11/2012 - 14:08 | 2335176 Guns N Metals
Guns N Metals's picture

Nat gas is used primarily for heating homes and power generation. With mild temps and an overall low demand for power due to a slumping economy, gas is cheap. I would invest in the hard asset itself (i.e.) nat gas well, or a gas pipeline. Stay away from financial assets like CHK, could be a while before that returns anything. And don't forget about stacking phiz gold/silver.


Wed, 04/11/2012 - 14:22 | 2335229 derek_vineyard
derek_vineyard's picture

if you want to track the daily price long or short use UNG

Wed, 04/11/2012 - 14:15 | 2335205 Id fight Gandhi
Id fight Gandhi's picture

Too much supply and a mild winter. With all the domestic production that came online after the peak back in 2005 it drove down prices.

Now they can't restrain prices but going offline less they want or else producers will take a big hit on operating costs.

LNG is a good way for all this to go, but it's still a ways off.

Honestly. NG could stablize here or drop more. Hard call to make. The spread with crude has never been wider, 51x. I would be playing crude Tumbling.

In the end it all comes down to BTUs

Wed, 04/11/2012 - 14:20 | 2335227 Flakmeister
Flakmeister's picture

There is currently a glut because of overdrilling in dry plays in '08 and the more recent frenzy in drilling for shale plays that yield liquids....These NGL and some condensate allow a modest profit and act like a production credits....i.e. the effective price recieved is ~$7 per mCF produced....

I give it no more than 18 months before NG is at ~$5-6 again.... 

To put it in perspective, the decline of the the existing shale NG wells is such that the equivalent production of the state of Texas has to be replaced on a *yearly* basis...

The best play is accumalate conventional NG royalty trusts like HGT...

Wed, 04/11/2012 - 16:07 | 2335750 CrashisOptimistic
CrashisOptimistic's picture

I know rather more about oil than nat gas.  

I am a buyer of SU at 23 and of OII at 28.  I will add HGT to my candidates.

Wed, 04/11/2012 - 13:58 | 2335125 sbenard
sbenard's picture

I've been searching for two years for an ETF to short natural gas. So far, I'm not aware of anyone that has created such a fund/ETF. If you know of one, please let me know.

As a futures trader, I can vouch for the fact that natural gas is CHEAP because it is both abundant, and domestically-produced. That's something that Obama, and his complicit progressives, are fundamentally oppposed to. They would have us grow food (ie., farmers), with machines fueled by SAILS. In other words, they would starve us to death in a human-caused FAMINE -- just as all collectivists have done in human history!

Wed, 04/11/2012 - 15:18 | 2335141 slewie the pi-rat
slewie the pi-rat's picture

take a shot at r_fish's question from the crimex perspective?

Wed, 04/11/2012 - 14:11 | 2335186 lizzy36
Wed, 04/11/2012 - 14:29 | 2335281 sbenard
sbenard's picture

Thank you!

I also just discovered these:



Both are leveraged short nat gas futures.

Wed, 04/11/2012 - 14:33 | 2335319 sbenard
sbenard's picture

Thank you!

I also just discovered these:



Both are leveraged short nat gas futures.

Wed, 04/11/2012 - 14:38 | 2335347 Flakmeister
Flakmeister's picture

Be careful not to short the bottom...

Wed, 04/11/2012 - 15:12 | 2335499 slewie the pi-rat
slewie the pi-rat's picture

another family destroyed by zH bloggers and their gambling fetishes

Wed, 04/11/2012 - 14:05 | 2335151 becky quick and...
becky quick and her beautiful mouth's picture

gas company just filled my 500 gallon tank yesterday. why did i get a bill for $1.89 per gallon? BASTARDS!

Wed, 04/11/2012 - 14:06 | 2335160 lizzy36
lizzy36's picture

Bottom line about natural gas is don't bottom pick.

Due to storage constraints (only commodity one can't take delivery of), once storage is full, it can go no bid (short covering aside).

Current storage is 63% above the FIVE year average.

Demand ain't going to help now. We need massive supply cuts. And since some producers are already on the ropes, not likely to happen. How do we do it:WOLUME.

Wed, 04/11/2012 - 14:06 | 2335161 Stuck on Zero
Stuck on Zero's picture

Natural gas is easily converted into Methanol.  It's about time that some big plants were built to do this.  We could use some more liquid fuels for our cars.

Wed, 04/11/2012 - 14:07 | 2335166 Id fight Gandhi
Id fight Gandhi's picture

Why not adjust for inflation here? Much much less per BTU than oil.

Spred is 51x to wti, We never seen that before.

Wed, 04/11/2012 - 14:09 | 2335179 junkyardjack
junkyardjack's picture

The industry standard is 6x BTU oil to natural gas.  But I don't think its ever been connected much to the actual price difference because of the differences in who consumes oil and who consumes natural gas.  

Wed, 04/11/2012 - 14:20 | 2335224 Id fight Gandhi
Id fight Gandhi's picture

There's 6million btu in a barrel of oil, 1 million btu in 1MCF of NG that's the 6x.

NG and oil were highly correlated until 2008-2009

Wed, 04/11/2012 - 14:07 | 2335168 FubarNation
FubarNation's picture

I have driven Natgas vehicles.  My Father used to do testing for cummins using natgas/diesel powerplants for his rigs.  It works. 

I have been watching the futures for months.  When NG blows I want to be on board. 

Natgas power generation in the home is the next big thing.  Drive electric genset for juice - heat h20 for your shower or to heat the house.



Wed, 04/11/2012 - 14:16 | 2335211 hedgeless_horseman
hedgeless_horseman's picture



Natgas power generation in the home is the next big thing.

For once I was early?  Sweet.

Wed, 04/11/2012 - 14:18 | 2335219 FubarNation
FubarNation's picture

HH curious to know what you put in your home.  Been looking for a solution for my next house.  Thanks in advance.

Wed, 04/11/2012 - 14:37 | 2335342 surf0766
surf0766's picture

I would be interested to know also. I bought a small propane backup gen for storms etc.



Wed, 04/11/2012 - 16:36 | 2335847 css1971
css1971's picture

British Gas (largest UK supplier) can supply you with a Baxi boiler which has a Stirling engine built in. It's close to 95% efficient overall. About 30% electricity conversion efficiency but all the "waste" heat is used for space and water heating.

E.ON now do something similar.

Wed, 04/11/2012 - 18:00 | 2336107 smiler03
smiler03's picture

Baxi Ecogen: £6500 ($10340) for the boiler then add fitting costs. It generates 1.1Kw, non storage of course. Sounds like a liability to me. Who knows what the maintenance costs are, probably exorbitant, and it doesn't bear thinking about what spare parts cost.


Wed, 04/11/2012 - 14:19 | 2335222 HarryM
HarryM's picture

Pickens has been hawking this for years

Wed, 04/11/2012 - 14:24 | 2335243 Id fight Gandhi
Id fight Gandhi's picture

Bah, he's been big on wind too. How's that going?

Wed, 04/11/2012 - 15:20 | 2335536 Big Corked Boots
Big Corked Boots's picture

That wind play really blows.

Wed, 04/11/2012 - 14:27 | 2335246 Mercury
Mercury's picture

Pretty soon it will be economical to hook NG engines up to windmills to make the propellers go around.

Like a little kid getting a balloon, the greens will get what they want and we'll have more energy capacity.


Wed, 04/11/2012 - 14:26 | 2335250 sbenard
sbenard's picture

My neighbor has 2 nat gas powered cars. Her father sells them. She has been paying well under $1 for at least the past year!

Futures today are at around 2.000, even dropping briefly below 2.000. Time for me to trade in my gasoline vehicle for a nat gas one!

Wed, 04/11/2012 - 14:26 | 2335258 Clycntct
Clycntct's picture

I'm looking at my home gas bill and it's showing 8.72$ a therm.

You do know what that says don't you?

It's the fkn Highest per therm that I can remember.

So in our black is white world we have the lowest cost comodity at the highest retail cost.

Nice if you can get that job Hopeeeeeee.

Wed, 04/11/2012 - 16:22 | 2335796 Id fight Gandhi
Id fight Gandhi's picture

Oh sure, when they have to finally drop the commodity cost, distribution rates will rise. Like when people cut back on electric, the companies up the dist. Rates as they're selling less electric.

Fuck that.

Wed, 04/11/2012 - 17:41 | 2336040 Flakmeister
Flakmeister's picture

And now you know why I recommend MLPs as a rock solid investment.... (hint, they get the gas to your utility)

Wed, 04/11/2012 - 14:36 | 2335337 sbenard
sbenard's picture

Does anyone know if nat gas degrades over time as gasoline does? I'm just curious because I have one vehicle that I only fill twice a year, and I have to use gasoline stabilizer in it. If I swapped it for a nat gas vehicle, perhaps I wouldn't need the sta-bil additive?

Wed, 04/11/2012 - 14:59 | 2335456 Stuck on Zero
Stuck on Zero's picture

Yes.  Natural gas degrades over time.  In just over a billion years cosmic rays will turn it into sticky hydrocarbons.

Wed, 04/11/2012 - 17:28 | 2336012 Flakmeister
Flakmeister's picture

Truly remarkable...

Wed, 04/11/2012 - 14:44 | 2335374 parch702
parch702's picture

Went by a vacant gas station the other day and the first digit on the price sign was 2.


I wondered how many decades have passed since it closed.

Wed, 04/11/2012 - 14:44 | 2335381 vegas
vegas's picture

New technology has allowed for more MASSIVE DRILLING and recovery of natural gas in the last 5 years. Hell, the industry is worried that if it is a cool summer they won't have enough storage for all the nat gas there is on the market.

Somebody go tell Chalky Soetero that drilling made this possible. Marxist POS that he is it won't matter, but anybody with a brain can see what happens when the energy industry is allowed to go get the goods.

Wed, 04/11/2012 - 14:46 | 2335395 adr
adr's picture

Checked my PUCO energy choice page for April. Lowest retail price for supplied gas is $3.79 plus $1.28 for "delivery" plus tax. Total per mcf is $5.68.

In 2003 I paid $7 a month for cooking gas with the $5 a month base charge. Then I remember in 2004 when Dominion lobbied to get the base charge increased and they got it. Base charge went to $25. All of a sudden a $7 a month bill went to $32. I got the gas shut off and used a toaster oven and an electric grill.

It doesn't matter what the wholesale wall street based rate is. The consumer will still take it up the ass.

Wed, 04/11/2012 - 14:48 | 2335402 Catullus
Catullus's picture

Pretty much the entire US Power industry needs to restructure at this point. Enough with government planning garbage. You're paying a pension contribution with your utility bill.

Coal should be something we export almost exclusively at this point. Decomm every coal plant, put the generator on a boat, and sell it to a third world country so they have the capacity for growth.

And there would be CNG in this country if the government didn't tax the ever living shit out of entrepreneurs.

Wed, 04/11/2012 - 14:50 | 2335411 atomaniac
atomaniac's picture

Actually, if you adjust the price even for official, "let them eat ipad" inflation, the price is already below that 1992 dollar, somewhere around 85  1992 value cents.

Wed, 04/11/2012 - 14:56 | 2335440 Jumbotron
Jumbotron's picture

Nat Gas Bubble bursting.

As all Ponzi Financed, Cornucopian Dreams of Abundant Perpetural Energy will go.  You're either going to pump too much and not have the refining and/or storage capacity or you will drain whatever is left of the resource faster than it would organically be drained due to real organic demand.

Either way...Boom and Bust in an economy that can only remain afloat if more Bubbles are blown to replace the ever quickening pace of the Busts.


Wed, 04/11/2012 - 14:57 | 2335444 CryingBear
CryingBear's picture

Electric cars should be built using nat gas as backup.

Wed, 04/11/2012 - 15:00 | 2335465 flacorps
flacorps's picture

If we convert our cars and power plants to natural gas we could find ourselves in trouble again a few years down the road.

But if we convert our cars and power plants to ammonia ... well, there are more ways to make that than you can shake a stick at. And the Haber process lets you make it from natural gas, so we can do that right away.

Ammonia is the second-most produced industrial chemical, and there are already a bunch of pipelines for it criscrossing the country.

It's like The Who said: We won't get fooled again!

Wed, 04/11/2012 - 15:30 | 2335580 bankruptcylawyer
bankruptcylawyer's picture

Natural gas hydrogen gas compressed air and ammonia can all be stored safely at lower pressure in adsorbtion tanks containing hard spongelike porous material like zeolite inside the tank. They are ALL part of a traniation in transportation feuls way from petroleum and liquid fuels. Rhey are also a FUEL solution rather thanmerely an electrical storage solutiin like batteries. The analogy to the battery and charging infrastructure is the actual tank and compresser combined with the fuel depot. Natural gas delivered by pipelines at 500 psi. Can be combined with biogas like gasoline is with ethanol. Can also be combined with hydrogen gas which can be manufactured cheaply in nuclear plants having so much excess heat they literally throw it out with cooling towers. Amonia is a bit more complex because its more corrosive and leakages can induce hallucinations or death. That said NH4 and ÇH4 are the 2 major gasses aside from hydrogen that can be burned and are lighter than air. They are very common naturally from both biological and non biological spurces on this planet and others. If we cant master CH4 and nh4 were not all that advanced yet

Wed, 04/11/2012 - 15:12 | 2335497 earnulf
earnulf's picture

Okay, I'm going to throw something out to let all the people who are smarter than me have a crack at.     An inventor in the mid-1930's showed off a car with an electric motor that apparently ran on nothing more than a small breadbox sized box in the passenger compartment.   Pushing a rod into the box apparently connected a current that drove the vehicle.    Pushing the second rod kicked the first up, shutting it off.   There was allegdly no outside source of energy other than this box.

Do we have anyone as smart as Nikoli seemed to be?    If he was harnessing the natural static electrical charge of the earth, why can't we do the same?   Or is the one idea that Big Oil doesn't want anyone sniffing around?

I'm not an electrical engineer, but some of the things that Tesla came up with are intriguing to say the least


Wed, 04/11/2012 - 18:15 | 2336143 smiler03
smiler03's picture

Are you serious?

I used to have a car that was clockwork. You just turned a key to store energy. It could only carry two ants at a time though.

Wed, 04/11/2012 - 15:24 | 2335560 navy62802
navy62802's picture

I bet CHK is wishing they had hedged their shit. They're taking it directly in the balls today./

Wed, 04/11/2012 - 15:43 | 2335597 devo
devo's picture

Buying things that are out of favor is generally a good idea.

t-2 before Obama declares NG "the solution to America's jobs and energy problem."

Wed, 04/11/2012 - 15:43 | 2335651 mark mchugh
mark mchugh's picture

Fun fact: The World leader is natural gas vehicles is Iran, with 2.86 million NGVs.

Wed, 04/11/2012 - 18:17 | 2336149 smiler03
smiler03's picture

+1 Great link.

Wed, 04/11/2012 - 15:45 | 2335657 sbenard
sbenard's picture

Nat gas futures now trading below 2.000!

Wed, 04/11/2012 - 16:04 | 2335745 Carl Spackler
Carl Spackler's picture

I don't really care about the theoretical auto argument.

I just want my heating bill to go down!

Wed, 04/11/2012 - 16:10 | 2335758 Freebird
Freebird's picture

Supposedly, your cupcakes will get a better texture with gas.

Wed, 04/11/2012 - 22:24 | 2336704 BurnCycle
BurnCycle's picture

cng/propane only makes sense if you are using it in conjunction with another fuel i.e diesel, the problem with using propane/cng/h2 as a transport fuel is that they have such low energy densities, i.e. you will need to fill-up more frequently if you drive enough to burn through multiple tanks in a week or a day, which becomes a hassle:


i wanted to put a propane system on my duramax, but I have no room to mount it anywhere seeing that there is a refrigerated box that takes up all the space the truck has. Looks like a larger turbo is my only option other than water/meth. injection

Thu, 04/12/2012 - 07:16 | 2337115 overmedicatedun...
overmedicatedundersexed's picture

great thread even flak kept his if it's in the ground it's bad meme in check. good going flak!..seems obvious that nat gas should never be talked about or experimented with for new ways to convert it to more usefull not say nat gas is a solution..keep it a national secret much like Obuma's history..boone tried to get it talked about as a possible solution to oil but well the MSM and gov have so far treated it as a tin foil hat idea.

much like our US economy has very simple solutions (which conflict with NWO agenda of big corps) it will be kept out of the public mind except on ZH. ..this was a very enjoyable read. thanks to all ..

Thu, 04/12/2012 - 08:09 | 2337196 Flakmeister
Flakmeister's picture

Hey, the only thing I have an issue with is coal... Let's move beyond the 19th century and quit using the dirtiest fuel out there....

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