Tuesday, September 14, 2010

The Natural Gas Glut

Click to enlarge.

The natural gas bubble popped from its 2005 inflation adjusted high. It is possible that we're now simply at the bottom of its channel and that support will hold. It is also possible that the support won't be there.

September 14, 2010
Fortune: What peak oil? Why an oil glut is ahead

Part of that surplus comes from increased oil and gas production, particularly from ongoing production in the non-OPEC countries (including the U.S., where a "shale gas boom" has created a natural-gas glut). It also comes from flat demand due to the stumbling economic recovery and changing consumer behaviors. Neither of those factors is guaranteed to last. But as the summer driving season passes and students head back to school, awareness has gradually dawned that we may be looking at an oil surplus for years to come.

For what it is worth, my behavior was permanently altered in 2004.

Source Data:
EIA: U.S. Natural Gas Prices
BLS: Historical Annual CPI


Anonymous said...

I have some natural gas pipeline and infrastructure stocks. They get paid by volume or fixed payments. Technically, lower gas prices could mean more volumes.

We probably should skip the prius, and use NG cars instead.


Stagflationary Mark said...


For what it is worth, the temptation to own natural gas stocks as a hedge against rising natural gas prices is fairly high for me.

You might find this video interesting.

September 16, 2010
Chesapeake's Hedging Risks

Everyone wants to be a hedge fund, myself included apparently. We clearly all can't be successful. Sigh.