| Natural Gas Powers Texas | | | | gas is a regional commodity. You can have a huge |
| According to the US Department of Energy, Texas | | | | discrepancy in gas prices from country to country, |
| produces and consumes more electricity than any | | | | from continent to continent, because of a lack of |
| other state. Over half of Texas' energy comes from | | | | adequate transportation - the means of shipping to |
| natural gas-powered generation plants. Texas | | | | take gas from where it's found in abundance to |
| produces 25% of the nation's natural gas and is the | | | | where it's needed." |
| largest producer; storing and supplying via pipeline for | | | | As a regional commodity now, present US domestic |
| all regions of the country. Yet while Texas has large | | | | natural gas prices are somewhat insulated versus |
| reserves of low grade coal, most of what is burned | | | | shocks from international problems. New shale |
| in its coal-fired plants is brought in via train from | | | | deposits being drilled throughout the lower 48 states |
| Wyoming and Montana. | | | | provide a more stable supply and stable pricing. As a |
| So, it makes sense for Texas electric power | | | | result, LNG imports to the US are dropping, |
| generators to rely more on the supply of natural gas | | | | prompting the United Nations International Energy |
| in our back yard rather than waiting for the next | | | | Agency's chief economist, Fatih Birol, to forecast a |
| 10,000 tons of coal to roll in from Wyoming. It burns | | | | world-wide natural gas glut continuing through 2015. |
| cleaner than coal and does not leave behind large | | | | In an interview with Bloomberg News, energy |
| amounts of cinder and ash that require proper | | | | commodities analyst Stephen Schork painted this |
| disposal. | | | | picture of the current supply: "We have more gas |
| In the past, natural gas was usually uncovered when | | | | than we know what to do with in the U.S.; we have |
| drilling for oil. Many middle eastern oil companies | | | | more waterborne gas floating around the world's |
| commonly used it to push oil out from deposits in the | | | | oceans that doesn't have a home." |
| earth and then let the gas burn off (called "flaring"). | | | | When prices began their slide, many gas companies |
| This was because there was neither large local | | | | capped their wells and cut their production. The EIA |
| demand for natural gas, nor a way to safely | | | | recently reported in its Short Term Energy Outlook: |
| transport it overseas to markets that wanted it. | | | | Total marketed production is estimated to have |
| In Texas, the practice was very different. Natural | | | | increased by 3.7 percent in 2009, despite a |
| gas and oil have been twin commodities that helped | | | | 59-percent decline in the working natural gas rig |
| build Texas. Natural gas pipelines stretch in all | | | | count from September 2008 to July 2009. |
| directions from Texas and it has long been used | | | | Even Qatar announced it will not pursue any new |
| throughout the US for heat, light, and electrical | | | | development in its North field reserve for another |
| generation. So, it's little wonder that in this country its | | | | four years. |
| price has long been bound to oil, a commodity in a | | | | Right now, the two big drivers of US consumption |
| very volatile market where prices are often shaped | | | | are its winter and its economy. This winter, an early |
| by world events. For this reason, power generating | | | | cold snap increased heating demands for much of the |
| companies have paid more for it than coal, nuclear, | | | | country and even caused a brief $1 price increase. |
| and wind. Because it is the most expensive and so | | | | Though faltering, the US economy has improved |
| heavily relied upon, the price of natural gas | | | | somewhat since September, 2008. Because of the |
| determines the price of electricity. | | | | slight contraction in productivity and the early cold |
| When the Wave Broke | | | | weather, prices have risen from their September, |
| Throughout 2007 and into 2008, petroleum and | | | | 2009 low -but they are still 50% lower than their |
| natural gas prices rose due to a popular tide of | | | | peak in 2008. The EIA statistic for the January 27, |
| speculative investment. This drove resource | | | | 2010 price at the Henry Hub in New York ($5.42 |
| development and innovation in natural gas | | | | mmBTU) is 14% higher than the same date last year |
| technologies to bring gas reserves to market. Among | | | | ($4.75). |
| these: | | | | The big new for 2010 is it's still a buyer's market. |
| The growing Liquified Natural Gas (LNG) trade is | | | | With storage levels still at 5 year highs, enhanced |
| expected to increase at 6.7 percent per year until | | | | domestic production capabilities, and slow |
| 2020. New fleets of inexpensively built ships and | | | | consumption growth, prices are not expected to rise |
| refineries expanded the industry worldwide. LNG now | | | | dramatically through 2010. EIA projects that the price |
| involves 15 exporting countries and 17 importing | | | | at the Henry Hub will increase to an average of $5.25 |
| countries, including the US. | | | | mmBTU in 2010, which is $1.27 more than the 2009 |
| Qatar announced its goal to develop both its | | | | average of $3.98 mmBTU. Remember, this is an |
| Northfield natural gas reserve production (from | | | | average price; seasonal increases will occur, especially |
| roughly 54 billion cubic feet in 1995 to 2.7 trillion cubic | | | | during the summer cooling months in Texas when |
| feet in 2008) and its Gas-to-Liquids capacity. Qatar is | | | | power demand is at its height. |
| now the world's largest LNG exporter. | | | | For Texas electricity consumers, this means that |
| Developments in horizontal drilling and rock | | | | energy prices will remain low through for the rest of |
| fracturing techniques with high pressure water | | | | the year, though there will be some fluctuation due |
| provide lower-cost access to several huge deposits | | | | to seasonal demand, as stated. However, one thing |
| of natural gas trapped in common shale. These | | | | about the near future is certain: consumption of |
| include the Marcellus shale bed and the Barnett shale | | | | natural gas will increase as economic conditions |
| in Texas (much of it under Ft. Worth) - which has | | | | improve. Businesses will need more people as they |
| been estimated at holding 26 trillion cubic feet of | | | | will get back to running equipment and machinery - |
| natural gas and is producing 2 billion cubic feet per | | | | and they will all use more energy. As consumption |
| day. | | | | rises, more generators will burn natural gas to meet |
| In July, 2008, the petroleum/natural gas price wave | | | | that need. Natural gas prices will rise. And so will the |
| peaked. Gasoline surged to over $4.00 per gallon and | | | | price of Texas electricity. |
| natural gas prices to $13.69 per billion BTU (mmBTU). | | | | Long Term Solutions for the Texas Energy |
| The cost of Texas electricity exploded. | | | | Consumer |
| Inundated with high fuel prices, consumers all across | | | | The best thing an electricity consumer in Texas has |
| America cut their travel and their energy use. In the | | | | right now is energy choice. If you sign on to a two |
| fall of 2008, the economy contracted so severely | | | | year (24 month) plan now, you can lock in the |
| that businesses laid off workers or closed. They | | | | current 2010 rate through 2012. Switching between |
| stopped using natural gas to heat their buildings and | | | | now and spring when rates are low could save you |
| stopped needing electricity to power their machinery. | | | | hundreds of dollars over the next two years. Why? |
| This helped drive down the price of oil, gasoline, and | | | | Because you can take advantage of a long term |
| natural gas. But in the case of natural gas, the big | | | | fixed energy plan that locks in the current low |
| developments in LNG supply and natural gas shale | | | | energy price. In the near future, the EIA projects |
| brought enormous amounts of natural gas out of the | | | | that prices will increase in 2011, averaging $6.00 |
| ground. Ready to use, it now lay idle in pipelines, | | | | mmBTU as the existing surplus shrinks in the face of |
| tanks, and ships at sea. With plenty of supply but no | | | | a rebounding economy. That's a 13% increase in price. |
| demand, the price sank further. | | | | Right now, if your energy plan is locked in at.114 cent |
| One year after the price peak, the DOE's EIA | | | | kWh for 1500 kWh per month, you're paying about |
| reported in its weekly natural gas storage report for | | | | $171/month. But in 2011 given a 13% average |
| August, 14, 2009: | | | | increase, your bill could jump to $193.23/month. That's |
| "Working gas in storage was 3,204 Billion cubic feet | | | | a difference of $22.23/month or $266.76 for the |
| (Bcf) as of Friday, August 14, 2009, according to EIA | | | | year. |
| estimates... Stocks were 562 Bcf higher than last | | | | To maximize your savings for these next two years, |
| year at this time and 513 Bcf above the 5-year | | | | you need to act before mid-April because that's |
| average of 2,691 Bcf." | | | | when the price begins its annual increase for summer |
| By September, 2009, natural gas lost over 80% of | | | | cooling costs. To find a long term plan that will help |
| its July 2008 value and had plummeted to $2.409 per | | | | you save the most money, go to Bounce Energy and |
| mmBTU. Texas electric rates fell as well. | | | | check out their Price Protector 24 plan. Qualified |
| Big Supply + Little Demand = Low Price | | | | customers will receive movie tickets, bill credits, |
| Because of booming US domestic supply, natural gas' | | | | companion airline tickets, price reductions and more |
| price tumble has decoupled it from oil's price. As | | | | for paying their bill on-time! |
| analyst Fadel Gheit put it, "[O]il is a global commodity; | | | | |