US Natural Gas Prices Will Rise This Winter // Diesel Chaos // Greens Sue EPA Over Texas Coal

US Natural Gas Prices Will Rise This Winter

Prepare for natural gas prices to rise across the country this winter. The Energy Information Administration forecasts that American households "that primarily use natural gas for space heating will spend an average of $931 on heating this winter (October–March), which is 28% (or $206) more than last year."

Natural gas is used for heating in nearly half of all American homes. The retail price of natural gas and the amount of it consumed are what determine the cost for households. The EIA expects high retail prices to be the prime mover on soaring bills. 

"On average, we expect retail natural gas prices to rise 22%, from $13.02 per thousand cubic feet (Mcf) last winter to $15.95/Mcf this winter," the EIA reports. "We expect retail natural gas prices in the Midwest to increase the most nationally, by 27% compared with last winter, to $13.80/Mcf."

Rising retail prices reflect an increase in natural gas spot prices over the course of the year. The EIA forecasts the Henry Hub price will increase by 54% to an average price of $7.26 per million BTUs. 

But the EIA also expects consumption to increase this winter, too, due to colder weather. "For households that use natural gas as their primary space heating fuel, we expect average consumption this winter to increase by 5%, or 58.4 Mcf, from last winter," they report. 

Diesel Chaos

Europe's in for more chop--the share of diesel from Russia shrank to 41% in September, down from near 70% in February. The diesel picture the world over is looking more chaotic by the day. 

"Powering trucks, trains and ships that drive industry, the fuel is commanding huge buy-it-now premiums in Europe. Beset by worker strikes over pay at French oil refineries that lasted over three weeks, the continent is struggling to be ready for a ban on imports from key supplier Russia that’s 3 1/2 months away," reports Bloomberg. "The US has the lowest seasonal inventories in data that began in 1982 going into winter."

Last week, traders were paying as much as $160 (over $20 a barrel) to grab barge loads of diesel. A month earlier, the price was $24 a ton. 

Europe won't have much luck gracefully weaning itself off of diesel imports from Russia as it received 40% of its diesel imports from Russia last month. "For its part, Russia continues sending about 80% of its shipments of the fuel to Europe," Bloomberg reports. That may change as discussions of the price cap on Russian energy continue and the December embargo lies ahead. 

“It’s extremely tight, end user stocks are extraordinarily low,” Gary Ross, a veteran oil consultant turned hedge fund manager at Black Gold Investors LLC, told Bloomberg. “I don’t know where resupply comes from. Diesel is the industrial product of the world, so it’s not going to help an already weakened economic environment.”

Greens Sue EPA Over Texas Coal

Environmental groups--the Sierra Club and the Environmental Integrity Project--have sued the Environmental Protection Agency for failing to make a decision on exempting 8 coal plants from certain air pollution limits during certain times of operation by the proper deadline. 

"At issue are particulate matter levels emitted from coal plants during startup, shutdown and maintenance that Texas exempts from pollution restrictions mandated by the EPA, the suit claims," reports Utility Dive. "The vast majority are PM10 and the much finer PM2.5 emissions."

Right now, Texas plans to put in place the national air pollution standards for particulate matter (PM) emission limits only while the plants are running. Emissions limits are waved during maintenance, start-up, and shutdown, the suit alleges. Four of the eight plants will either be closed or converted to natural gas. 

The Environmental Integrity Project says that the air permits that the Texas Commission on Environmental Quality issued to the plants show the exemption has resulted in a substantial increase in PM emissions. "That includes NRG Texas’s Limestone coal plant increasing from 236 pounds per hour to 8,000 pounds per hour at one unit, a 30-fold increase; the Martin Lake plant’s PM emissions growing from 853 pounds per hour to nearly 3,000 pounds per hour, a seven-fold increase, and the San Miguel plant’s from 437.5 pounds per hour to 1,803 pounds per hour, a four-fold increase," reports Utility Dive. 

The groups are trying to get the EPA to make a decision that will force emissions limits on the coal plants at all times, not just doing normal operations. 

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Conversation Starters

1. China will no longer re-sell LNG to Europe. "The National Development and Reform Commission (NDRC), China’s top planning body, has told the country’s state-held LNG importers, including Sinopec, PetroChina, and CNOOC, that they should stop reselling LNG cargoes and keep them to ensure Chinese gas supply this winter," reports Oilprice.com. Chinese LNG has helped relieve some of the energy crisis's strain on Europe and now it looks like the Continent will have to find a way to go without yet more this winter. 

2. Fortum, the Finnish utility company, has announced it will begin a 2-year feasibility study of building nuclear plants in Finland and Sweden (where the incoming government has just announced a new appetite for nuclear energy). "Fortum will examine commercial, technological and societal, including political, legal and regulatory, conditions both for small modular reactors (SMRs) and conventional large reactors," the company said.

3. The head of Russia's Gazprom has threatened to cancel all flows to Europe if the EU proceeds with its price cap. "Such a unilateral decision is definitely a violation of the essential contract terms, which will entail the suspension of supplies," Gazprom CEO Alexei Miller said.

Crom's Blessing