(Marketwatch) Natural-gas futures jumped on Wednesday, set for their highest close since June 2011, and prices may still have quite a rally ahead. February natural gas NGG14 +6.55%was last at $4.68 per million British thermal units, up 24.5 cents, or 5.5%, on the New York Mercantile Exchange. It was set for highest settlement in about 2 and a half years, FactSet data, tracking the most-active contracts, show.
“With tight fundamentals, $5 gas is not impossible,” analysts at Citi said in a note Wednesday. Natural-gas futures haven’t closed at $5 or above since mid-2010. Strong demand is expected to push gas inventories to very low levels with cold weather lingering, the Citi analysts said, adding that the end of March level is expected to fall to 1.256 trillion cubic feet. As of the week ended Jan. 10, they stood at 2.530 trillion cubic feet, down 443 billion cubic feet from the five-year average, according to data from the Energy Information Administration.
The EIA will issue its latest weekly data on Thursday morning. Analysts surveyed by Platts forecast a decline of between 102 billion cubic feet and 106 billion for the week ended Jan. 17.
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I have been warning for years that the rapid move towards dependence upon natural gas for commercial, industrial, and residential use of natural gas, including the use of gas to generate electricity, poses a real risk to residents of North America and Europe. We are now beginning to see the effects of this focused dependence –
Coal-fired electric generation is a very inexpensive and very resilient means of providing electricity, but the government is willfully making a direct assault on coal-fired electric generation. The over-implementation of natural gas powered electric generation stations, to quickly replace coal-fired generators which are being regulated into extinction, places another risk factor into the electric market – that of excessive natural gas demand. Take a look at the nat.gas distribution system HERE, and note the areas which are “highly dependent on interstate pipelines” for their nat.gas supply.
When demand exceeds the capacity of a natural gas pipeline, pressure reservoirs (storage tanks) at the pump stations must be drawn down to maintain the volume of gas in the pipeline, to prevent a loss of pressure…but this only works until the reservoirs are bled dry. At that point, the pressure pumps must be spun down, and the pipeline is effectively off-line until it can be re-primed, and a minimal buffer capacity returned to the pressure reservoirs, which would require hours, or even days, to accomplish when demand exceeds capacity across a wide area.
Not only would such a “bleed-off” result in a black-out of electric generation, it will affect all the direct customers who use gas in their homes and businesses. In short, it could potentially produce a double-whammy outage, with all that implies – no heat, no lights, impaired communications, and in many areas, civil unrest.
Coal is easy to store at the point of generation, increasing the resiliency of the local electric grid to outages – coal generators can often run for weeks without running out of fuel, not so with Natural Gas. In the event of a Nat.Gas infrastructure breach, gas-generated electric service will likely be disrupted in short order. This is one more way in which the present administration is setting our country up for massive disruption, and posing a substantial risk to American lives.
WE HAVE BEEN WARNED
LT
~ I pray for my country not because we deserve mercy, but because we cannot stand Judgment
