Energy Prospectus

Here is the direct link to my Saturday podcast. The most recent podcast can always be found on the EPG home page.

https://youtu.be/6qQrfQLhiek

I cannot stress enough how important and impactful the tripling of coal prices is. High coal prices = more demand for natural gas fired power plants.

Without cheap coal, utilities have no option other than using more natural gas to ramp up electricity this summer.

"Unanticipated slower US natural gas supply growth will swing the US natural gas market from “structural surplus”, a condition that has now existed for well over 15 years, to “structural deficit”. Almost immediately following the shift, US natural gas prices will surge and converge with global gas prices. Given today’s $35 per mcf international gas price, US natural gas could surge by almost 5 fold.

The global natural gas crisis has largely by-passed the United States over the last 12 months, however, our analysis tells us that this is about to change. The next phase of the global energy crisis is about to emerge in the US natural gas market. Given the huge amount of natural gas consumed in the US economy –14 mmb/d (in oil equivalent terms ) versus 20 mm b/d in oil—the impact from surging natural gas prices will be monumental."

Adam Rozencwajg - April 21, 2022

MY TAKE: I am not as bullish on natural gas prices as Adam is, but I do think the price of U.S natural could return to the BTU equivalent of oil 6:1, pushing HH gas prices over $16/MMBtu, if WTI oil stays at $100/bbl. If natural gas in storage is more than 300 Bcf below the 5-year average at the end of May, the "Bidding War" between utilities and LNG exports will ramp up intensity.