I live in the USA and I am concerned about the future. I created this blog to share my thoughts on the economy and anything else that might catch my attention.
Thursday, March 29, 2012
Oil vs. Natural Gas
Check out the combination of rising oil prices and falling natural gas prices.
Click to enlarge.
Something tells me that the parabolic trend is not going to last forever. Brace for a future exponential trend failure.
The natgas oversupply now is strongly reminiscent of the 1980s glut -- pumpers had fixed costs to pay so had to sell at whatever the market would pay and try to make it up on volume, which of course pushed prices lower.
Alaska would have been well-advised to just leave their oil in the ground when they were getting only $10/bbl for it in the mid-80s, but they needed to pump -- that pipeline wasn't going to pay for itself.
Please note that I am in no way trying to imply the timing of the failure.
ReplyDeleteThe cheap natural gas and high oil pricing is enabling the recovery from Canada's marginal stuff.
ReplyDeleteConverting to CNG is no picnic, alas.
The natgas oversupply now is strongly reminiscent of the 1980s glut -- pumpers had fixed costs to pay so had to sell at whatever the market would pay and try to make it up on volume, which of course pushed prices lower.
Alaska would have been well-advised to just leave their oil in the ground when they were getting only $10/bbl for it in the mid-80s, but they needed to pump -- that pipeline wasn't going to pay for itself.
I need to buy a natural gas vehicle. The dollars I would save!
ReplyDeleteMy girlfriend has a few natural gas vehicles (otherwise known as horses, lol).
ReplyDelete