I agree. For some reason, trading half the value of the car every 100 miles didn’t catch on. It might have been better to have a B and B or an " entertainment" facility every 100 miles with a few outlets in the parking lot.
@dagosa “The natural gas boom will be short lived”. Don’t count on it! The world actually has more gas than oil. I do agree that it has lots of coal, but using it directly as a fuel will become less and less desirable.
If the US had no gas at all, it could survive easily by importing from nearly every continent. The Middle East so far has the most proven, Russia, with Australia, and Africa coming in very strong as well.
The US also have enormous gas reserves in Alaska and the Arctic. It will have to wait till pipelines and LNG plants are built to bring it out.
@Docnick
It didn’t come out the way I wanted it. Please read the rest. Nat gas is being sold to us a replacement for oil. Fine. There appears to be an abundance of it. But, it’s not going to be a cheap replacement for oil as the more it’s being used and sent onto the world market, the higher the demand me more price will follow the world market and not local. The same energy companies and interest control both. The idea that nat gas will be cheaper has been proven false around here. Initially sold as a cheaper alternative to oil, which we are more dependent upon, for some high energy use businesses, the companies are now seeing the price jump up dramatically. They are being charged high delivery fees. The price manipulation and lack of choice has started. Once everyone is converted, whether it be busses or businesses or housing developments, the prices rise.
High supply does not correspond to energy costs when the availability of different sources are not allowed to compete. It’s a fallacy to think that “cheap” to produce energy sources will automatically result in lower prices. They are all manipulated on a supply/demand cycle where supply is adjusted by the suppliers to keep prices high.
The price has jumped from “shut down all gas drilling rigs” to “ok, maybe we can drill some gas wells now”. Historically gas has sold for about 1/10 the cost of oil, so $30/Bbl oil meant $3/MCF. So at, say, $80/Bbl oil, gas would typically be at about $8/MCF. Thanks to the glut of production associated with shale drilling, it had dropped below $2/MCF. One loses money on drilling shale gas wells below about $4/MCF, so many rigs stopped drilling for gas. The price is now up to about $4/MCF, half of what historic levels would indicate, so there is still MAJOR savings going on for us as a country from cheap natural gas. If exports are allowed, it may go up a bit, but it’ll always be cheaper to sell it into the US market then liquefy it, put it on a tanker, and ship it overseas, so the US will always have lower price gas on average than those countries importing natural gas (LNG).
And I love how the “same energy companies and interest control both”, but they couldn’t keep natural gas prices from plummeting to $2/MCF…some ‘control’…
You can believe your own hipe but drilling and manufacturing costs have less to do with the price to the consumer pays then local supply to the consumer. There are too many “Smartest Guys In The Room” scenarios repeated over and over again. Even a last summer gas spike, nothing to do with crude prices, nothing to do with drilling costs or anything else but was attributed to, " maintence shut down" then “converting to summer blend then…” good grief…what ever else they could dream up to control local supply.
It rattles the mind of the average consumer to actually believe your numbers as the primary factor in local price to the consumer. The idea of any corporation is to maximize profits regardless of the cost per unit for the manufacturer to develope and and distribute. Once an energy source is considered profitable, as nat gas now has, it is promoted on a lower cost level to promote use then eventually, any thought of savings is a dream unless, that consumer can choose different energy sources for the same vehicle and business while shopping for it.
All you have to do is look at energy sources in states that have natural renewable resources like wood. When the price of oil goes up for whatever contrived reason, nat gas goes up, the price of propane and wood goes up with a price difference defined by convenience and local availability. even though processed many months before. When natural gas has been converted to on large scale as a replacement for petroleum, the new reasons for fluctuation of prices will be trotted out there when the real cost is local supply, controlled by the manufacturer to maximize profits. It’s the nature of the beast. The problem is, there is no competition for these energy sources, chooses by your own" presentation" from different companies. The same companies being the wealthiest are the only ones left to control legislation and exploration. They then control prices to maximize profits.
Normal market prices prevail most of the time when there is a free market. With respect to gas, there are several markets; the international price, based on Liquified gas, or LNG, which is about $12 per millon BtUs, and the “stranded” North American market, where production is relatively cheap, and no liquifaction is necessary, and where at this time, gas is going fopr about $3-$4 per million in the US and Canada. At that price, both Canada and the US have substantial surplusses, which many countries would love to buy, especially the Ukraine and others being blackmailed by Russia.
Russian gas is sold mostly through pipelines and in Europe is priced somewhere between imported LNG and their own internal price, which is conpletely artificial since Gazprom is the largest and state owned company and Russian citizens are probably subsidized and Western Europeans and the Chinese and Japanese are overcharged relatively speaking.
Every company wants to maiximize profits, even Costco, whose margins are razor thin due to competition.
If US companies want to sell gas overseas, they cannot charge $12 per million BTUs since they have to liquify and transport it there. They will likely get more than the current $4 of course, but that will not impact the domestic price since there is now a gas glut! In those circumstances you don’t RAISE prices.
Both Canada and the US want to export gas overseas, and both have a huge supply on hand that will not greatly inflate the selling price. Look for about $6 per million BTUs as the market stabilizes. That will happen when more power plants convert to gas and we start exporting LNG to offshore markets.
There is no conspiracy or price fixing taking place here.
There does not have to be a conspiracy. There is the obvious fact…you can conclude that as more LNG goes in the world market, the price here will remain constant here. I don’t feel that’s true. World market prices have long had a big influence on energy costs. I think most of you have touted that many times over with respect to oil…just because we become the new Saudi Arabia of natural gas, does not mean energy companies will suddenly become self limiting in their profit making ability here at home. They will raise prices based on it’s own merit for LNG and when those are converted over from oil, which I agree, is a good thing, just don’t expect prices not to rise with the same contrived reasons as petro products…all of which is natural for energy companies which have NO competition. Liquefying will always have a supply side effect. Just don’t expect it to translate into the direct savings we may have for non liquified. It won’t .
“Normal market prices prevail most of the time when there is a free market.”
That doesn’t even mean anything. What is a “normal” market price and how would you know if its “not normal?” I mean - you know - there’s the price that things sell for. And that’s called the market price.
"There is no conspiracy or price fixing taking place here. "
As if everything was always so black and white. We have quasi-markets in most of our major industrial sectors, and certainly in energy. They are controlled by oligopolies. This is not the same thing as a “free” market nor does it mean “price fixing” or imply any sort of absolute control where actors get to just dictate their wishes without restraints.
I think we’d all be better off not thinking of economies or their various sectors as either “markets or not markets” - it’s not a dichotomy, but a matter of degree. Dichotomizing it all is a way of grossly oversimplifying so that easy textbook simplifications can be used. A multinational corporate oligopoly in an industry has “more market” in it than a monopoly, but a lot “less market” than a polyopony with regional or only national proprietary businesses in it.
I would like an electric vehicle powered by my solar array,what people are missing is the independence it could offer,kinda like the virtue of Obamacare(as I understand it) you cant be turned for preexisting conditions-Kevin
Sorry,I had to mention that and yes the big insurers used to be famous for that,know from personal experience