Winter's Coming
Winter is coming for the natural gas addicted global North. Now some warned for decades not to trade one fossil fuel addiction for another, doing that was no way to make money, but then whoever made money on shale natural gas, until this criminally stupid war in Europe commenced, remains an open question.
How much supply is there? Well that's another good question. One thing for sure, there's not enough natural gas for the world to run on it, no matter what the oil industry says, and the oil industry is the natural gas industry.
The FT has a piece about spiking natural gas prices for New England as winter sets in. Wait! I thought this was Europe's problem? Well, the FT headlines, “New England ‘importing European prices’ in looming gas supply crunch.”
What price freedom I've always said. Once again New England, Sunshine Patriot or Winter Soldier?
The article isn’t quite clear on how natural gas for New England became constricted this year, but they're now in competition with Europe for… wait for it… American gas supplies, sort of ironic don’t you think?
In the last 30 years, global consumption of natural gas has doubled! In 1990, the US accounted for a quarter of global consumption, which was by far the largest chunk. Since 1990, US natural gas consumption, by deliberately designed policy, rose 63%!
During this time, the old big ocean-like fields of natural-gas in the US peaked, launching, just as with oil, a shale rush. Below, the two Energy Information Agency charts show the decline of “traditional” and the massive increase in shale natural gas production, which now accounts for almost 80% of all US production.
Just like oil, shale natural gas production has to incessantly drill, which makes it expensive. Quit drilling, production instantly starts declining. A study by Penn State says, “average first-year decline rates across Pennsylvania appear to range from approximately 60% to 80%.” Now, maybe since Penn State got rid of the pedophiles they cant do natural gas any better than football, but that's not too far off much industry accepted standards.
Like shale oil, shale natural gas hasn’t been a money maker. Remember, when Chesapeake Energy filed for bankruptcy in 2020, they were $7 billion in debt. OK, that’s no FTX, but then Chesapeake was actually selling something, unlike FTX's “pig in a poke” as the infamous shyster from Little Rock use to say.
Well one thing for certain, winter's coming and natural gas prices will be up.