CBS Report on Natural Gas

[eyeamdaman]

Here is the report from CBS last night. If four ATTORNEY GENERALS come up with this conclusion, then why isn't there being somthing done??

I just don't get it. The cost of heating my house has nearly doubled (and it's been a mild winter). Then to see reports like this makes me want to bust some chops.

http://www.cbsnews.com/stories/2006/03/08/business/main1384727.shtml

[bigfish1965]

Funny how the energy company blamed it on the hurricanes disrupting supplies when the majority of your natural gas comes from Canada.

[eyeamdaman]

Let's not get this post dusted! I would like this to be an informative discussion that answers a few questions.

First, does anyone know what exactly "price goughing" is? Is it simply people just raising the price because they feel like it? Can it be that simple? I thought there were laws that apply.

Secondly, How can 4 attorney generals discover this and NOT press the issue?

Lastly, what can we (as consumers) do about this?

[r u surprised]

Not trying to get it dusted, but it's frustrating at how the cost of everything is skyrocketing . I'm in Iowa and we had one of the warmest January's on record, I had no $500 bill but it was still high and I don't think we're the only state in that category. We hit a cold spell in Feb. and wow did it jump back up. WHY?? Now they're saying gas may hit $3/gallon for the summer and it's jumped 20 cents in the last 2-weeks. HOW is that justifiable?? And these utility companies are making record profits!! It's gotta give somewhere...sometime, it just can't keep going this way.
I don't understand it as well.

Sorry, just venting

[sho]

I dont have any answers. But I beileve that since gas went up that they thought they could raise prices too. But one other thing i dont understand is with all the online stores and more people buying stuff online now than ever how can they say its a demand thing. i use less gas than i ever have before because i can order a pole or shirt instead of driving 20 to 60 miles to get things and save on gas.

[Polar Bear]

Last fall I finally broke down and added more insulation in the attic. Talked with a guy from Energy Star and he told me that adding insulation alone will not do as much as sealing all cavities from living areas to attic, i.e. plumbing, electical wiring, light fixtures, chimney, etc. So I spent about a week digging through existing insulation and used expanding spray foam ($4.00 a can) to seal holes. Then the wife & I blew in about 80 bags of cellulous ($580.00) R-a boat load, about 24". In southeast Wisconsin, december was colder than normal and our bill was a bit lower than last year. January was also lower, and haven't recieved February bill yet. So at this rate the cellulous should pay for itself in less than 2 years.
This year new 621.
Next year new windows.
Polar Bear

[interesting]

It doesn't add up. I think the above post about most of our Natural Gas coming from Canada was interesting. I'm no petrolium expert, but isn't natural gas total different that the petrolium supplied by the middle east? We are not dependant on southern refineries to produce it are we? So, there shouldn't be any relationship between Natural Gas and Petrolium/Gas used in our vehicles...right? And if that's the case...why the spike in price????

[nebrwalleye]

I'll be adding a corn burning stove before the next winter. They are so easy to install (even if you don't have a vent through the roof, you can easily go through a wall on your home) and they've come a long way. Most all are programmable, electronic ignition, etc. I was going to buy one the past Fall - a fancy one at that. Cost was about $1400 and it would heat about 2000 sq ft. Would burn about a bushel of corn per day if ran on high. Any local farmer would have gladly sold me a small trailer of corn at $1.50/bushel which is more than they get at market. I could have easily paid for that stove in what I've over paid for natural gas this winter.

[karpbuster]

I think most of the world's natural gas comes from CBS in the form of hot air and the like, so they should know. :)

karpbuster

[KP]

I would love to answer the question with some facts, resources and links, but it will get dusted. Some folks just don't like the truth to get out because it upsets the apple cart. But I would suggest investing in many of our energy companies for the next 18 months, Then dump it fast.

So instead I would like to recommend nebrwalleye research the BTU's per bushel hour on the corn stoves. They don't quite get the heat generated like a wood stove over the same period of time as long as your burning seasoned hard wood. Pellet stoves are nice but the cost of pellets doubled and in some areas almost tripled this year too. Then became tough to find I heard. Hey, why can't they gouge if everyone else is.

Pre wood stove heating bill this year was $380. Post wood stove, adding blinds to the windows to replace drapes and shades, and plugging all the air leaks, was $75 over the same period of time. However, that month was a 5 degree warmer average. The next cold spell and having added a ceiling fan to help draw wood stove heat up from the lower level...$62. I did invest a lot in the stove and everything else, but I think it will be 1/4 paid for by the end of the season.

It helps if you have a source for wood and you definitely have to work harder at it. Plus it's messier than pellet or corn. But I enjoy running my chain saws, splitting wood and doing someone else a favor at the same time by removing their dead wood.

[Targa2]

You want to really get ticked about the gas and oil thing then read this!!!

http://www.vialls.com/wecontrolamerica/peakoil.html

While your at it look up U.N. Agenda 21.

[capnlee]

America's dwindling oil profits???????

[Priority1]

When they started using natural gas to generate electricity, I knew that it would be the end of reasonable gas heat for homes. They claim it is just supply and demand, but it is so manipulated. We should get our electricity from Coal fired or Nuclear power plants. We have the technology, but we need to put all the safegaurds in place and use it. JMHO

[EthanolisKing]

I'm curious if the recent boom in ethanol production doesn't have something to do with the increase demand of natural gas. They are huge,huge users of this fossil fuel. Not sure...wondering.

[targa2]

Oil and gas have never been proven to be a "fossil fuel". That is a theory believe it or not..

There exists another theory about what it is that has been far better researched, peer reviewed and documented.

http://www.vialls.com/wecontrolamerica/peakoil.html

[cxtx]

umm,
Last I saw, we get a lot of natural gas production from the gulf and many of those facilities were shut in and/or damaged by the hurricanes too.

I can't complain though. Live in PA, added R-19 batts to the attic this fall at a total cost of $300, +/-, and haven't had a heating bill (natural gas) over $140. We pay the full bill too and don't spread it out..

[ngp]

Elsewhere on Nymex, natural-gas futures closed slightly lower Thursday, but held their ground above a one-year low.
"Traders are essentially writing off this winter season and are now focusing on the summer, which will need the additional storage to offset an active hurricane season," said Agbeli Ameko, a managing partner at First Enercast Financial.

U.S. natural-gas stocks fell by 85 billion cubic feet for the week ended March 3, the Energy Department reported earlier Thursday.
Analysts at Fimat said that market estimates ranged from a decline of 80 billion to 140 billion cubic feet, with Fimat looking for a drawdown closer to 123 billion cubic feet and UBS expecting a drop of 110 billion to 120 billion. A year ago, supplies fell 134 billion, Fimat said.

[npg]

(BW) ATP Oil & Gas Corporation Announces Record Proved Reserves, Fourth Quarter and Annual 2005 Results and Operations Update
http://www.chron.com/disp/story.mpl/conws/3711536.html

[Mlaker]

We are a free market society. Although there is some utility regulation, most markets are pretty free after Reagan's era as president. Energy products are commodities traded on futures markets. Futures markets are not all supply/demand but also relate to a RISK factor of buying or selling at a set price at a certain future date. Hurricanes, terrorism, world wide political unrest all increase risk and are reflected in price of the risky commodity. It doesn't matter if Natural gas comes from Canada, a risk in the Gulf of Mexico market raises the value of the same commodity in another market. Just like a crop failure in So America raises the value of crops raised in N. America Just my outlook.

[captnshark]

There's one big problem with your analogy. If Brazil suffers a crop loss, the commodities in N. America dont SKYROCKET. At best were talking about $.05 - $.50 per bu. Using your analogy to oil,....the next time Brazil suffers a drought..we should expect the value of soybeans to go from $5.25bu to $25.25bu.

[cxtx]

The world market isn't near as tight on soybeans as it is with oil and natural gas. Last time I looked, the world economy doesn't depend and rely on soybeans to move either...

[tight]

It's not as tight as we've all been trained to believe in oil or gas either. Perception is 90% of the battle. It's amazing what those in control work so hard at having you to believe.

Had I known some time ago that we'd have the president we have today who has things favorable to making money for "his base," I would of bought a seat and made my millions and fished the rest of my life. Not to mention laughed my way all the way to the bank like they do about the rest of the poor suckers (me included). Unfortunately rather than the way it is now, I'm pissing and moaning when I leave the pumps and thinking about going back to how I used to fish as a kid, out of a row boat.

[eye4aneye]

I've been in the nat gas business for 24 years. I have seen what the market has done and I can tell you that the problems go much deeper than you might think. For starters, this country made a terrible mistake when the government and power companies capitulated to the activists and stopped building nuclear power plants. There was and is a huge need for new power generation and the environmental laws and activism have made for huge demands on clean power generation. Nat gas power plants are cheap and quick to put up, use massive amounts of fuel and are really clean. 5 years ago (during the Kalifornia power crisis) gas fired generation was going up en masse. There was simply not enough nat gas production in the field and transportation (pipelines) to support the growing residential, commercial demand AND this huge new outlet for gas...power generation. High demand+low supply=high prices.

What's more, it isn't getting any better. Production is up bigtime but it can no way keep up with demand so the US is importing liquified nat gas and will be importing much, much more in the future. The US is also importing coal at levels no one ever dreamed possible and coal imports will also go up dramatically. Other nations like France rely heavily on nuclear power. It is cheap, clean, safe and reliable. The USA needs nuclear power very, very badly but there are no politicians or generation companies that want to take on the lefties.

The price you pay to heat your home is really driven by the demand for gas. The price of gas is a continental thing. The producers are going to sell there gas at the market rates and the lack of production in the Gulf (it is still less than 80% restored) has an effect on the entire country. Besides, Gulf gas is shipped directly to Chicago and all points in between via NGPL. I doubt most folks realize that the midwest corridor is historically supplied from Texas. New Canadian pipelines have taken up some of the job but you cannot discern between the gas, the producers will seek out the highest price

One more thing, the high prices help the production companies a great deal. They are very bad for the distribution companies (the guys you write your check to). Distribution companies get paid by how much gas they move through their system. They make no profit on the actual commodity. Higher prices mean they move less gas because people conserve. The distribution company takes the hit and it is really hurting them right now.

[KP]

I've worked in the nuclear power industry for 23 years, beginning back to the last dozen plants to be constructed. Though anti-nuke activists played a part in blocking the construction or completion of some plants, you can blame the utilities themselves, the design firms, and the greedy general contractors for why the US program stopped.

Utilities did not want to share the the construction designs of plants and design firms preyed on that. Only a couple of the 103 operating plants are of similar design. When something goes wrong or needs to be upgraded, it's a unique experience every time. Compare that to France where they are on their 5th generation of standardized design which saves cost across the board. But there is only one utiltiy governing body in France, EDF.

Design companies made a lot more money designing a new plant every time rather than a few standard designs.

General construction companies like Bechtel, Flour Daniel, and Brown and Root over ran construction costs 2,3,4,5 times original estimate. The last new construction project I was on was in Texas where Brown and Root estimate the plant cost at $773 million, and final cost at start up was $15 billion. Some of it was just shoddy workmanship using non-union workers with no experience. Thousands of people were hired in and issued cards that told them what they were. Electrician, pipe fitter, etc. I was told once to hire in 50 additional workers that we didn't need. They told me to stick them in a trailer off site and bill them daily. A similar thing happened on a Bechtel managed project. Greed and design stupidity is what ruined nuclear power in the US, not activists or environmentalists.

I'm working on designs now with two utilities that are going to build two unit reactors on 3 already approved sites. Several more utilities are in the process as well. The sites already have existing plants on them so there are no envirnment studies to be approved. We'll see new plants on line by 2015. All the current designs are standardized.

I'm thrilled to see my career evolve back to seeing new plants constructed again before I retire. It is the best method of power generation. Although I may be a bit biased.

[tight]

Again perception is 90% of the battle. Have to have someone to blame, got to be the activists as the reason for high prices and hampering alternative energy...c'mon now guy. You've been snookered. Activists stand nothing to gain or lose, they make their living whining as some sort of feel good do-gooder role in society. The one's in control love it, it is a great smoke screen. Face it in the end they are a fractional minority that is only brought to the spot light when it makes sense for big business. Blame them all you want, but if I was making money hand over fist and had some idiot activist scapegoats to take the heat, I would do the same thing.

Those that have the money and control could persuade the government to do anything anytime, that's why they pay lobbyists like they do. If it made sense for them to invest in Nuclear they would do it or would of done it long ago. But since no one is pushing the issue other than recent political stump talk, why bust open the golden egg. With an oil man in control the egg is safe for a few more years no matter what feel good initiatives are talked about. It will take well managed action to get results. I'm still waiting for ROI on my tax dollars that have been wasted in this latest energy policy scheme.

[larrym]

It's not a "perception" that we are dealing with a non renewable energy source and it's not "perception" that demand is currently growing faster than the supply. When your dealing with a product (natural gas and oil)that has a limited supply, prices will go up. Bet money on it!

[eyeamdaman]

LarryM,

You are saying the demand for gasoline and natural gas has nearly DOUBLED in the last few years? Wow! Seems like just yesterday I was paying $1.35 for a gallon of gas. What happened? Tell me how much more gasoline we use compared to 2001.

It now costs me twice as much to heat my house as it did 3 years ago (with mild winters). What happened? Tell me how much more Natural gas we use compared to 2001.

And tell me just how the demand can jump so quickly. $1.85 gas in March to $3.00 in July??

Supply and demand...give me a break.

[tight]

Right on the mark eyedaman, way to go! It always amazes me how some people can lose common sense or worse never had it in the first place.

To add to your facts, ever wonder what causes a 40 cent spike or dip in prices week to week month to month lately? Maybe it has to do with all the people warming up their cars in the winter on cold mornings? Obviously I'm just kidding...suprised though we haven't read something like that, sometimes I think the propoganda wizards think they are tryin to explain things to apes.

[larrym]

I'm not saying demand is the only reason....but it's a big one and it's world wide demand we are talking about, not how huch you or I used to heat our home or drive our cars. With the growth in industry in China, India, Japan..... demand is up big time. The second part is the fact we are using a commodity that there is a limited supply of. Put the two together and you get higher prices.

When I said "bet your money on it" I meant that literally. Instead of complaining about what we see happening in the world (jobs moving to China and India or oil going up in price) determine what that means and who will benefit from it and then invest money there. If some of our 401K or other funds are not invested in mutual funds focusing on China or India or in energy stocks we are missing a bet. On the other hand, if you had $ invested there over the past couple of years you have made more than enough to pay higher fuel bills and still have some left over. Thw world is going to change and oil is likely to go higher.....we can't stop it and neither can our politicians but we can turn it to our benefit. I'm reminded of saying I heard once. "If a new bridge is built. some will complain that the ecology of the river was harmed, someone else will complain about the taxes spent to build it and still someone else will figure out a way to make money because the bridge is now there." It's our choice how we want to look at change.

[passing_gas]

Read pages 6-8 of this for an understanding of Natural Gas supplies:

http://research.cibcwm.com/economic_public/download/mimar06.pdf

Loss of NG production was real, continues, and will probably continue if hurricanes disturb the Gulf again this summer.

[eyeamdaman]

Larry,
Did every person in China,India, and Japan buy a vehicle between March and July last year to drive demand up? I don't think so. I'll agree that maybe the demand has gone up, but not enough to almost double our cost.

We are the most powerful country in the world. We are quick to pay the price to protect others....yet we'll stand here and let them kick us in the balls. As far as I am concerned, we deserve a crude oil voucher.

[Buckeye]

I'll buy all that $1.50 corn you can get your hands on!! Yesterday's markets closed at $2.26. A quick phone call and paper shuffle and it's a neat $.70+ profit.

[tight]

Here we go again...nice report, no suprise published by a banking and investment firm. What gets me on what hand they say there is no such thing as global warming, then on the other they say it's warming sea surface temperatures. So which is it? Ok I got it is what it is when it makes sense to make up a good reason to jack up the markets and rape the money from the rest of the people, and it isn't when it means that restrictions would put a damper on the cash cow.

Again lets let common sense come into play here. I don't think Hurricanes are some new twist mother nature just decided to drop on us. They have been and will continue to occur for eons. Anybody remember Hurricane Andrew that wiped out a good chunk of the S. tip of Florida? I wouldn't be suprised if you didn't. Reason you didn't have the 24 hour media back then like you do now, and its let see who can make more of a story out of something than what it is for the sake of ratings and as a plus give our rich good buddies a reason to manipulate the markets. It is as if it is well orchestrated game being played by those in control.

[eye4aneye]

Regardless of the reasons why, nuclear power has been neglected in this country and the demands for generation have grown dramatically. Coal and nat gas are carrying the load and that is not good for our future. Nat gas fields have been maturing and reaching the end of their productive lives and production is up in other areas that don't have the pipeline cpapacity to serve them.

Power generation is a very wasteful and shortsighted use of nat gas and we consumers are all paying for that.

As far as oil prices go, I am not and never have been in that business and don't pretend to understand it but I can tell you this; the new ultra low sulfur diesel requirements are going to put a huge burden on refining and transportation in this country. If you think activism has nothing to do with these ULS diesel requirements I think you are mistaken. Get ready, it hits in June!

[tight]

OK, talk about taking their sweet time. Why is 80% of the production and piping capacity still off line after a hurricane that was months ago? Are they waiting for a check from FMEA? Last I checked there was not a whole lot this infrastructure built beneath sea level either, like the city of NO, which by the way was wiped out by a piss poor levy and an inability to withstand the storm, not neccessarily the cat 3 storm alone.

You can bet that if the 80% capacity being off line was disrupting profits it would be fixed almost immeadiately. But since this is supply and demand, where supply was disrupted (supposedly) and demand was the same, can charge as much as they want and fix the damage on their own time schedule.

Now if this system was truly a capatalist venture, it would behoove someone to win the race to get this stuff back on line, but since it is not and is a monopoly there is no need to rush. No need to spend money you don't have to out of the profits to make repairs or in the larger picture promote an alternative energy source(s). In general this is how the monopoly operates. Until there is a forced incentive to spend money they won't and will continue with status quo.

[Merck]

I don't believe nuclear power is going to be a big player in our future. Too expensive, too dirty and too dangerous. After every near miss they alawys say "Well THAT won't happen again because of new safeguards". We have had 3 near misses that I'm aware of that could have easily been worse than Cernoble killing and maiming hundreds of thousands and making large tracts of land unliveable.I imagine there have been more.Reporting of these are often covered up. I have to travel to France now and then and if you want to see the impact of nuclear energy visit there. Most of their power comes from nuclear and even well off people very seldom have air conditioning because of the operating costs. Of course the same is with electric heat (very rare,..maybe short use space heaters) People are very stingy about lights etc. often live in very dim light conditions.
The problem right now isn't supply, if you increase the price the supply will inrease, (again for now) when they close wells more than 85% of the hydrocarbons are still there but too hard (expensive) to pump. We have plenty of coal. To clean it up is another matter ($$)
The other problem is that nuclear fuel prices is and has always been tied to the price of oil and gas. It keeps parity with the primaries (oil,gas and coal) More nuke plants doesn't make things any cheaper. add to the fact that nuke plants are heavily subsidized with tax dollars and no one is completely addressing the future costs of waste products and decommisiong of plants (which has to be done after so many years, we have one that is being decomissioned not far from here and the cost of that is many more times than the building of it) and you get very expensive power.
BTW we can double our power out put in using ultra efficient main transmission lines,..very expensive right now but the costs are rapidly comming down.
BTW with low tech things I have cut my heating costs to about 1/2, w/o any sacrifice in lifestyle, I keep the house 72-76 which is what Momma wants.

[bugwheate]

Yo, I think they should get gas back on line, too. Just drop pipes down and lettr rip. No time at all. Instantaneous, just like a bic. Flick it and ya got power and money and lower prices and heck, all da steel for the pipes. I mean, nuttin to it. Just redrill em all and pump da stuff. Big conspiracy like you say.






Not.

[underground]

Last time I checked most of the natural gas and petro pipelines are underground. Did we not have a hurricane? You make it sound as if it was an earthquake. Again, what is taking so long and why? No conspiracy implied, just seems odd. Eerily things sounds like the Enron rolling black outs, but with a better scapegoat in mother nature and glamorized hurricanes.

[Rob Stratton]

Most people really don't understand basic business principals such as supply and demand. Read this link from Halliburton's financial forecast for 2003...it will show that US oil rigs were reduced in numbers 28% from 2001-2003...this is because there was such a glut of oil on the market and oil companies couldn't make any money. It shows similar numbers for natural gas supplies, there was too much on hand in 2001 so the companies simply shut down production capacity in order to drive up prices.
We must not forget that our vice president was te CEO for this company...it reads in their own report that tensions in the middle east will significantly raise profitablilty for this company....who owns a large percentage of the shares? Take a look. It will surprise you.
The oil and gas companies have intentionally lowered production capacity, that's a fact.....it's not that there is a lower actual supply it's the fact that the companies won't pump it.
http://www.halliburton.com/ir/ar/2002/mda1.html

[chadk66]

there is so much oil in the ground just in the lower 48 states that it would take many many years to pump it out. Probably couldn't do it in our lifetimes. This is coming from a very close friend of mine that is a consultant on drilling rigs. They are constantly finding new reserves that make the last one pale in size.

[Tim_]

Till they find a way of disposing of the nuclear waste than this is not a good alternative. To say that it's clean is only scratching the surface. What happens to the half spent fuel rods? The best thing the US has to offer is to bury it in a mountain. Than when were gone and 10,000 years later when the next civilizations comes we can poison them and tell them how clean this technology is. There's allot better options than this, wind, solar, hydro. We have enough waste above ground, we don't need any more.

[foreign investment]

Sounds like a great oppurtunity for some outside competition perhaps a little foreign investment. Seems other countries can do everything better and cheaper these days why not in this business? As a relative comparison, think the domestic auto industry is over priced, I bet if we allowed some real competition into the oil and natural gas markets you would see fuels sold at pennies on the dollar. Just like Wal-Mart for gas and oil, I'm all for it, let free trade and the free market rule!

[cxtx]

Tight,
I think we can safely say you win the moron of the year award for your comments in this thread. Trying to compare Hurricane Andrew to Rita and Katrina as far as their effects on oil and gas production and distribution is idiotic, at best. Yeah, Florida and other East coast states have lots of oil off their shores on the continental shelf but NONE of them want to allow oil production, even if it is 50+ miles offshore of their coast and no way, now how within sight of land to mess up the tourist industry. Off course Andrew had only a minor affect on the economy, especially oil and gas. Not nearly as many oil rigs were affected by it.

And to the poster stating that the pipes are underground and production and distribution shouldn't be affected, need to do a little research there bud. Majority of the piping from the gulf oil fields is laying on the sea floor. But, when a big storm comes by and rips semi-submersible and floating oil rigs off their moorings and deposits them 10's to 100's of miles from where they are supposed to be, yep, does take quite a bit of time to get things up and running. Not to mention there is a lack of a highly skilled work force in sufficient numbers to get all these rigs up and running instantly as you seem to want. Takes highly skilled workers and lots of specialized equipment and specialized vessels of which there is a finite amount of to repair and replace the damaged rigs, pipes and equipment.

I lived in Houston for a few years and had many friends and fishing buddies in all facets of the oil industry so I think I can speak with a little bit of knowledge on the subject, not just speculation and WAG's based on how bad my pocket book is hurting.

[tight]

To CXTX,

Who in the heck is "we" stuff? Let me guess all the rest of the Broke Back steers and quenns in Texas??? I think we can safely assume you still have ties to the oil and gas industry therefore you tend to favor the profit gouging that is taking place and see absolutely nothing wrong with it. You can hype up the storms all you want and paint all sorts of pictures of all these rigs floating wildly across the gulf, but you still have no facts to prove it just a bunhc of somewhat reasonable explanations in the form of tall tales and stories to quell the masses.

You'll see one day when all this corruption gets investigated. When and if that day comes I can here you now, you'll likely say well I didn't know, it all seemed so reasonable never though that could happen in America, geeze silly me? With that I can only hope your intertwined somehow with this same regime, that is destined for a date in the slammer or justice the old fashioned way, a date with a tree. I trust your kind about as much as a man with a turbine and an AK47.