Will Natural Gas Prices Soar This Winter?

[russ_watters]

http://www.usatoday.com/money/industries/energy/2006-12-01-nat-gas-usat_x.htm

To be fair, the article isn't terrible, but it does have several "duhs" in it. The headline on the main page, though, is rediculous:

Natural Gas Prices Rise: Heating Bills Could Skyrocket This Winter

First, the obvious: fuel prices follow very regular cyclical patterns during the year. [edit: strangely, they cycle higher in the summer than the winter according to the DOE - I'll have to look into that more]. So what does that headline really mean? Well...

Natural gas prices are soaring on commodity markets, a development that could lead to higher-than-expected heating bills this winter...

"Consumer bills should be significantly lower this year than last year" even with the recent increase, he says.

In other words, the only actual news is that is being reported is that there has been an unexpected (unexpected by whom, it doesn't say) spike in prices recently, but prices are/will still be lower than last year.

Now for some "duhs"

Natural gas prices trading for delivery in January rose 11% in November and are trading near a 10-month high.

Natural gas price futures for January are higher the closer to January we get? Duh. Homer Simpson held on to his pumpkin company stock too long too...

Much of the gain has come in the last week. The reason: Cold weather is sweeping across the USA, leading to increased demand and, thus, higher prices.

A quick shock of cold weather causes the fuel futures prices to spike?!? You're kidding!

Here's a prediction, though - sort of like Homer Simpson, who didn't consider how Halloween would affect his pumkin prices until after it happened, the market got spooked by the first quick shock of cold weather and the increases will slow as reality (real weather, real supply and demand) kicks in.

"It's cold, and it's cold across a large swath of the country. So demand is up," says Rusty Braziel, managing director of Bentek Energy in Golden, Colo.

Duh. Wait, I have a prediction - it'll be colder in a month. Where's my Pulitzer?!

Heating oil users, however, are expected to pay a little bit more as an expected increase in usage is projected to outweigh a decline in prices.

That one isn't a duh, it is just a head-scratcher.

 

[Moonbear]

You mean if someone uses heating oil, they'll have a bigger bill if they use more to heat their house?! Well, smack me with a fish, I'd have never figured that out on my own! (We really need a smiley that effectively conveys sarcasm.)

 

[Astronuc]

To be fair, the article isn't terrible, but it does have several "duhs" in it. The headline on the main page, though, is rediculous: First, the obvious: fuel prices follow very regular cyclical patterns during the year. [edit: strangely, they cycle higher in the summer than the winter according to the DOE - I'll have to look into that more]. So what does that headline really mean? Well... In other words, the only actual news is that is being reported is that there has been an unexpected (unexpected by whom, it doesn't say) spike in prices recently, but prices are/will still be lower than last year.

Now for some "duhs" Natural gas price futures for January are higher the closer to January we get? Duh. Homer Simpson held on to his pumpkin company stock too long too... A quick shock of cold weather causes the fuel futures prices to spike?!? You're kidding!

Here's a prediction, though - sort of like Homer Simpson, who didn't consider how Halloween would affect his pumkin prices until after it happened, the market got spooked by the first quick shock of cold weather and the increases will slow as reality (real weather, real supply and demand) kicks in. Duh. Wait, I have a prediction - it'll be colder in a month. Where's my Pulitzer?! That one isn't a duh, it is just a head-scratcher.

That's why I stay away from mainstream media - like CBS, NBC, ABC, CNN, . . .

And I'm leary of newspapers like usatoday, NY Times, . . . . They have a penchant of stating (and often its restating from other news sources) the exceedingly obvious. I've also noticed that some stories in NY Times recently look a lot like stories I've read on the BBC. Arrggghhh.

There is a lot of volatility in the energy sector at the moment, especially after Katrina (Gulf supply of natural gas and oil) and since the invasion of Iraq, and the supply controls by OPEC (who want higher prices).

Gasoline prices may spike on distribution and crude oil prices, and problems with supply and refinery issues. Many states get special formulations which require special processing - which raises the cost - and formualtions differ between summer and winter.