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Our Best Hope This Winter May Be Global Warming!
Abundant, inexpensive natural gas and petroleum supplies that had become a reliable feature of a prosperous U.S. economy thanks to sideways drilling and hydraulic fracturing may soon fade to melancholy memories.
So you might wish to rethink the importance of natural gas this winter as sunbeams and windmills fall far short of keeping your home water pipes from freezing, and your Tesla recharged amid skyrocketing global energy costs.
Americans are already feeling the pain as electricity and utility gas prices were up 5.2% and 21.1%, respectively, over the last 12 months in August.
Higher energy costs are bleeding into inflation. Some analysts predict that gas prices could double this winter if U.S. production doesn’t increase, and global demand remains high.
Last February’s Texas freeze lifted natural gas demands, a hot June and July draught in the West reduced hydropower production, requiring that more gas than normal was needed to power air conditioners, and Hurricane Ida in August added to ongoing shortages by forcing nearly all of the Gulf of Mexico’s gas output offline.
COVID transportation and industry shutdowns reduced crude oil prices and production, which has in turn, cut down on the amount of gas produced as a byproduct.
Despite rising prices since spring, according to Baker Hughes Co., there were more than three times as many rigs drilling gas wells in 2014 when blizzards froze the Northeast, with prices hitting more than $5 per million British thermal units (MMBTU’s) than about 100 currently in operation.
Natural gas prices — now up to about double year-to-date — are racing higher on a combination of concerns over low supply and rising demand as winter approaches.
This is now the season drillers fill storage tanks and caverns to prepare for frigid temperatures when heating demands are greatest. However, the U.S. Energy Information Administration (EIA) estimates that the volume of natural gas in storage is currently 16.5% less than a year ago.
Seasonal stockpiling isn’t happening quickly enough, with natural gas inventories 7.1% below their five-year average and less margin for error.
This is occurring as the EIA also expects U.S. power plant coal inventories to fall to 61.3 million short tons at the end of the fourth quarter, less than half last year’s levels… the lowest figure since at least 1997.
As a result, analysts predict it might not have to get extraordinarily cold this winter for prices to reach heights unknown during the shale era, which transformed the U.S. from a gas importer to supplier to the world.
These escalating natural gas prices will have broad and substantial impacts across the U.S. economy, ranging from households to heavy industry. In addition to heating homes and generating electricity, gas is also used to make plastic, steel, and fertilizer.
There are no practical energy replacements.
According to the EIA, in 2019, the latest complete year of data, 81% of the world’s energy supply came from fossil fuels.
Even if all nations were to fulfill their current Paris Climate Accord promises — which none other than the U.S. are — the EIA estimates that fossil fuel use would still make up 73% by 2040.
So-called “renewables” produce mostly electricity, which accounts for only 19% of all energy the world consumes. Of that amount, wind and solar combined account for only about 3%.
Even if all electricity turned “green,” the world would still mostly depend upon fossil fuels.
Meanwhile, as winter approaches, America — recently a net natural gas exporter — must now compete for a global share of low hydrocarbon heating fuel inventories, including coal.
Europe’s anti-carbon policies have created a self-inflicted fossil fuel shortage as governments have heavily subsidized renewables like wind and solar and shut down coal plants to meet their commitments under the Paris Climate Accord.
As a consequence, demands for liquefied natural gas and coal are soaring in Europe as lackluster wind-power generation and shutdowns of nuclear, as well as coal plants, have left many of these countries scrambling to import more fossil fuels to power their grids.
China has been importing a lot more coal from the U.S. after banning the commodity’s import from Australia over a diplomatic spat. Yet, with coal and natural gas increasingly in short supply, fuel-powered generators in Asia are switching to burning oil, which is also pushing up crude prices.
Goldman Sachs projects that U.S. crude may hit $90 a barrel by year’s end, which could add 10 to 20 cents a gallon to gasoline prices at the pump.
And although OPEC and Russia are gradually ramping up supply, U.S. oil production remains 15% below pre-pandemic levels since about 20% of production in the Gulf of Mexico remains knocked out from Hurricane Ida. Even before the storm, U.S. oil and gas producers were curtailing investment amid a hostile political climate.
Count on the Biden administration and its radically liberal Democrat Party minions to take a bad situation and turn it far worse for America.
Inexplicably, after shutting down the Keystone XL pipeline and drilling in ANWR, Biden dropped Trump sanctions on Russia’s Nord Stream 2 pipeline under the Baltic to Germany.
Joe then unsuccessfully pleaded with OPEC to help lower politically painful pump and natural gas prices. These extra costs have major influences on nationwide transportation and food impacts that will fall most consequentially on low-income populations.
On top of this, as Interior Department permits issued for drilling on federal land declined to 171 in August from 671 in April, a proposed $3.5 trillion Democrat reconciliation bill will tax natural gas and oil, driving your heating and electricity bills even higher, potentially costing the U.S. economy $9 billion, plus as many as 90,000 lost jobs according to an analysis by the American Petroleum Institute.
All these policies to curtail American oil, gas, and coal production will empower adversaries, especially Russia, Iran, and China, the world’s three largest gas producers after the U.S.
Whereas Democrats won’t succeed in banishing fossil fuels, we can fully expect the U.S., like Europe, to face some very tough cold winter and hot summer seasons ahead, which again depend upon energy competitors and adversaries for help.
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