Energy Prospectus

Working gas in storage was 3,155 Bcf as of Friday, August 25, 2017, according to EIA estimates. This represents a net increase of 30 Bcf from the previous week. Stocks were 239 Bcf less than last year at this time and 8 Bcf above the five-year average of 3,147 Bcf. At 3,155 Bcf, total working gas is within the five-year historical range.

Natural gas storage level will go below the 5-year average much sooner than I predicted it would in May. Next week we should see a big drop in natural gas production because of Hurricane Harvey. The hurricane had only a minor impact on the report above.

I now expect natural gas in storage to be MORE THAN 100 Bcf below the 5-year average when the winter heating season begins in November. The last time that happened was November, 2013. In December, 2013 the spot price of natural gas spiked to $8.00/MMBtu. I do not expect that to happen, but I do think we will see $4.00 gas this winter.

REMEMBER THIS: The United States has very little natural gas import capacity, expect for pipelines from Canada. We are now a net exporter of natural gas. Our economy is extremely dependent on a steady and reliable supply of natural gas for power generation, space heating and feed stock for a rapidly growing petrochemical business. Big spikes in natural gas prices occur when the utility companies are forced to bid against each other and commercial users for supply. The utility companies are required by law to maintain pressure in the distribution systems that bring gas to our homes.

PS: There are going to be GASOLINE shortages across the U.S. because of Hurricane Harvey. You should all keep your cars and trucks full of gasoline or diesel.

Some of you may recall that I said months ago in my podcasts that the U.S. natural gas market was under-supplied by 2.0 to 2.5 Bcf per day.

I track gas storage closely and you can too at http://www.americanoilman.com/

Since the week ending 3/10/2017, which is 24 weeks ago or 168 days ago, the delta to the 5-year average has declined by 408 Bcf. 408 Bcf / 168 days = 2.4286 Bcf per day.

There are 11 weeks remaining before the winter heating season begins, 77 days. So, if this trend continues we will be close to 180 Bcf BELOW the 5-year average when the winter heating season begins. For now, I am sticking with my forecast that we will begin the winter with 100 Bcf less gas in storage than the 5-year average.

AND the United States consumes over 10 Bcf per day more than it did five years ago and we do not have any ability to increase imports of natural gas.

Natural gas production is on the rise, but not fast enough to solve this problem. Hurricane Harvey has significantly reduced natural gas production and it will stay down for a few weeks.