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In the Past Year, US Natural Gas Price More Than Doubled, EU More Than Quadrupled

The cost of air conditioning this summer and heating your home this Winter is high and rising.
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US Natural Gas Price courtesy of Trading Economics 

US Natural Gas Price courtesy of Trading Economics 

In the past year, the price US consumers pay for natural gas has more than doubled. About 38 percent of electricity in the US comes from natural gas according to the Energy Information Administration EIA

And about half of the homes in the United States use natural gas for space heating and water heating. 

Natural Gas Surges With US LNG Export Terminal Set for Fast Restart

US Natural Gas Price courtesy of Trading Economics 

US Natural Gas Price courtesy of Trading Economics 

Yesterday, Bloomberg reported Natural Gas Surges With US LNG Export Terminal Set for Fast Restart

US natural gas prices surged after a key export terminal in Texas reached an agreement with regulators to restart as soon as October after an explosion.

Freeport LNG, which was shut down in June after a blast, has entered into an agreement with the Pipeline and Hazardous Materials Safety Administration to resume operations in early October at almost full capacity, the operator said in a emailed statement Wednesday. That would boost demand for natural gas by nearly 2 billion cubic feet a day, equivalent to roughly 2% of domestic output.

The restart of Freeport LNG is poised to increase the strain on US inventories of the heating and power-generation fuel ahead of winter. Concern about tightly supply has triggered stomach-churning volatility and led prices to more than double this year. Gas held in salt caverns and depleted aquifers is about 12% below levels typically seen for this time of the year, and booming domestic demand this summer has limited suppliers’ ability to add gas to storage. 

Stockpile Deficit

Natural Gas Stockpile Estimate

Heading into Winter, the stockpile of US natural gas is about twelve percent below normal. 

EU Natural Gas Price 

EU Natural Gas Price 2022-08-04

In the European Union, the price of natural gas shot up from 43.869 to a record 199.25, about 4.5 times vs a year ago.

Thanks to sanctions and the now-abandoned Nord Stream II pipeline from Russia to the Europe, the EU is struggling to get gas. 

Marine Le Pen Calls for End to Sanctions

RFI reports French Far Right Leader Le Pen calls for an End to 'Useless' Russia Sanctions.

"I want these sanctions to end," Le Pen said at a parliamentary press conference on Tuesday. "Otherwise Europe is going to face a blackout, notably on the question of Russian gas imports. "The sanctions are simply useless. All they do is make Europeans suffer. And that, incidentally, includes French people.

"You'd need a huge dose of bad faith not to realize that, contrary to the inflated claims of our government, the Russian economy is not on its knees. They are not on the brink of bankruptcy.

"We are suffering far more from these sanctions than the Russians are," said the MP for the northern Pas-de-Calais constituency. They can find other buyers for their oil and gas, they can get around the embargoes, she added. "This has been a series of failures by the European Union."

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Sanctions Don't Work, Le Pen is Correct

Le Pen is correct on all counts. Putin is delivering only 20-40% of normal gas supply to Europe but at a price that is 4.5 times higher. 

Thus, Russia is making more for selling less. 

Global Natural Gas Flow

Global map from Nations Online Project, annotations by Mish

Global map from Nations Online Project, annotations by Mish

Instead of getting natural gas from hundreds of miles away over existing pipelines we compress natural gas in the US then ship it 4,700 miles away Europe.

Meanwhile, Russia fearing eventual European cutoff is building new pipelines to China. 

De-globalization to punish Russia and China is seriously impacting global supply chains and increasing costs for everyone,

The one point Le Pen misses is that the EU would still vulnerable because Russia can no longer be considered a reliable partner. Once Russia has pipelines to China, it will not need the EU. 

That is years away however. Meanwhile, supply chain disruptions and de-globalization are driving prices up everywhere.

For further discussion, please see De-Globalization: New Supply Chains Are Inefficient and Will Drive Up Inflation

We have economic illiterates running the country and running the Fed. The average Joe is getting killed.

Dear President Biden, the above charts speak for themselves. If you want to lower inflation, stop the sanctions.

This post originated on MishTalk.Com.

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