Replies to This Discussion

Permalink Reply by kittycatmama on February 22, 2011 at 2:32

Didn't natural gas rise in spring and summer of 2008 to its elevated levels because it was tagging along with high

oil prices

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Permalink Reply by P.G. on February 22, 2011 at 2:45

Rising oil prices will drag prices of just about everything up. Not so sure about NG though.. They don't use petroleum to produce or haul  it like they do everything else...

Too bad no one has figured out a way or has had the desire to use NG to compete with petroleum..

They are still trying to figure out how to use NG to compete with coal whose price is very low and stable...

Doesn't make any sense...huh?

Now if only the Middle East was selling the world it's coal?

 

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Permalink Reply by Skip Peel - Mineral Consultant on February 22, 2011 at 3:02

In '08 there was no natural gas glut.  The price of oil ( a world commodity) will rise and fall on geopolitical news.  Natural gas (a domestic commodity) will only rise appreciably on increased demand.

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Permalink Reply by CypressKnees on February 22, 2011 at 3:08

This is probably not the right discussion for this question, but assuming the USA has a domestic oil supply using the horizontal drilling..how effeciently/quickly could that be accessed and could it be processed or whatever they do to make an adequate supply of gasoline? Is $5.00 a gallon enough to make it cost effective?

What are the hold backs to doing the above?

Thank you-

(this is a pretty sutpid question for you all who know all this stuff-please forgive.)

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Permalink Reply by Les Bamburg on February 22, 2011 at 5:28

CK, there are no stupid questions.

 

Horizontal drilling techniques are quickly being adapted for unconventional oil resource plays and these high crude oil prices will keep that process moving forward.  This may provide more domestic supply but is not likely to result in much downward pressure on crude oil prices.

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Permalink Reply by CypressKnees on February 22, 2011 at 8:43

Too kind!

Thank you for response.

But let's say there was no way to meet domestic demand from ?OPEC?

Could the US galvanize its oil driller people fast enough to supply the population?

Sorta like the military-industrial complex during WWII? Kaiser and the boats, etc.?

(On a personal note, I wish NG would just take over all the jobs Oil has, of course!)

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Permalink Reply by P.G. on February 22, 2011 at 9:21

I hate to think about the government taking over the Oil and NG business... They might want the royalties as well..

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Permalink Reply by JHH on February 22, 2011 at 3:10

Feels like Jimmy Carter all over again.

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Permalink Reply by Robert on February 22, 2011 at 3:36

Inventories are expected to remain high through 2011.  The projected Henry Hub natural gas spot price averages $4.16 per million Btu (MMBtu) for 2011, $0.22 per MMBtu lower than the 2010 average.  EIA expects the natural gas market to begin to tighten in 2012, with the Henry Hub spot price increasing to an average of $4.58 per MMBtu.

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Permalink Reply by P.G. on February 22, 2011 at 3:43

I doubt if it would make a price difference as to where petroleum were produced under the current circumstances.. US consumers would have to pay what ever it would fetch on the world market either way..

If we were less dependent upon petroleum in general and more dependent on domestically produced NG, prices would probably be more stable which would give us a competitive edge in the world economy wise..

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Permalink Reply by CypressKnees on February 22, 2011 at 9:45

Good answer!  (Expression borrowed from "Family Feud".)

I'm pretty uninformed about the Libya thing. I understand the States only import about 5% of our oil from Libya.

But other nations really get a lot from that country. With that "force majeure" thing, those countries may be not able to get their oil?

And that will make the price of oil even more?

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Permalink Reply by Les Bamburg on February 22, 2011 at 5:24

Susie, there is no fundamental relationship in the US between crude oil prices and natural gas prices.  This is because very little consumption can switch between the two commodities and this has been the case since the early 2000's.

 

International natural gas prices will increase because most contracts are linked to crude oil prices or crude oil product prices.

 

You could actually see a slight negative effect on US natural gas prices if rising crude oil prices result in a slowing of the economic recovery process.   

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