US Natural Gas Prices Re-Spike, after the Big Plunge

Just when we thought the plunge in natural gas prices might take pressure off inflation, it starts all over again.

By Wolf Richter for WOLF STREET.

So we have a little situation here. By early June, the price of natural gas futures in the US had spiked to over $9.50 per million Btu, roughly triple the price from a year earlier, and quadruple the price in 2020. This spike was caused by US exports of LNG, which are booming, with new LNG terminals coming online one after the other since 2016. Exports added to demand for US natural gas and increasingly linked US natural prices to global LNG prices.

And then, on June 8, a fire shut down the huge Freeport LNG natural gas liquefaction plant in Texas, which cut LNG export capacity by 17%. Over the following four weeks, US natural gas futures plunged by over 40% into the $5.50 range. And it was cited as one of the reasons why inflation already peaked again.

So here we go again. This morning, natural gas futures jumped to $8.29 per million Btu, adding to the jumps over the past week. The price has regained much of the lost spike, and is up about 30% from a month ago, and has more than doubled from a year ago. So this isn’t going to help CPI readings at all:

The Freeport LNG plant remains shut over safety concerns. The Federal Energy Regulatory Commission (FERC) said on Tuesday that it would inspect the plant in September. So maybe, the plant will start loading LNG tankers again later this year.

In the summer in the US, power consumption spikes due to increased use of air conditioning. This summer, there has been a deadly heatwave with blistering triple-digit temperatures over much of the US, and power consumption strained electric grids, and demand for natural gas by power generators spiked.

So maybe it was a good thing that LNG exports got cut just ahead of the heatwave and left some extra gas for US consumption to power air conditioners and keep the price in the US from spiking from the stratosphere into the ionosphere.

This is the development of LNG exports from the US to the rest of the world. The US also exports natural gas via pipeline to Mexico mostly, but also to Canada, and those exports of pipeline natural gas are not included here. This chart shows just LNG exports, though April, the latest data available from the EIA and doesn’t yet show the decline in exports due to fire at the LNG terminal:

Historically, the price of natural gas in the US, even at today’s level, is not all that extraordinary.

Before a large-scale boom in fracking turned the US into the largest natural gas producer in the world, and created a glut in the US that caused the price to collapse, there was the squeeze, when LNG terminals were being built to import natural gas (now converted to export terminals), and prices were very high for years.

Today’s price is right back in the range where it had been between 2004 and 2008:

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  119 comments for “US Natural Gas Prices Re-Spike, after the Big Plunge

  1. Root Farmer says:

    NG prices are a large driver of nitrogen fertilizer prices. This is going to continue putting pressure on future food prices. Smartphones we can live without. Food, not so much. Continuing signs of much more inflation in the pipeline!

    • Helmut says:

      Smartphones do not even taste very good without some spices.;)

      • SoCalBeachDude says:

        They’re best tossed into crock pots for stewing. Just be sure you have a temperature app running on them!

      • Harvey Mushman says:

        An “Apple” a day keeps the doctor away.

      • Robert says:

        Helmut
        You should try them with some HOT sauces like they have in Mexico

        • rankinfile says:

          I thought they only got smart phones once they crossed over the border.I place to charge them too in their hotel rooms.

        • Sit23 says:

          Was it Joe’s wife who said let them eat Breakfast Tacos? Or something like that.

    • ru82 says:

      You would think so but Wheat, Corn, Soybeans have been dropping the past 2 months. Corn and Soybean prices lower than a year ago when nat gas prices were $3 and not $8

      • ru82 says:

        And what is crazy, we have a big heatwave and grains are still crashing. Wheat is down 7% today, Oats are down big today.

        With rising prices this spring, farmers must have planted a lot of extra crops. That or heatwaves are good for crops. LOL

        • drg1234 says:

          Probably due to Ukraine export reopening.

        • Sams says:

          There is a lot of speculation in commodites, that may cause coupling between production cost and price of commodity to be lost.

          Untill the commodity is sold, then the purchasing set the price limit.

          An observation done when there have been famines previus, the price of food do not rise if there is no purchasing power. People go hungy and die because they can not afford food.

          Farmers on the other hand may not be able to sell their crop.

          Everything finance can have distorted prizing that bad that prices are low with little supply comming as there was a lot of unbacked futures sold.

          When little supply arrive, there will be a brief spike in prices before purchasing power run out and prices drop that low that few invest in future supply.

        • Flea says:

          Are people blind ,we’re in a huge drought

        • rankinfile says:

          or a real buying opportunity for you.

        • NBay says:

          rank,
          That’s two inane comments in a row, ya gonna go for the hat trick, or did those take the mental energy out of you?

      • LGC says:

        That’s not actually helpful. If the farmer’s inputs are rising (diesel, fertilizer, etc) and the price being paid for their end product is going down. Exactly how is the farmer going to stay in business?

        • rojogrande says:

          Subsidies in many cases.

        • Flea says:

          So gates can own all the farmland

        • ru82 says:

          Farms are being bought by big corporations, sovereign countries, and Bill Gates. lol

          They will not lose money. I cannot remember if it passed or not but Biden was trying to forgive billions of farm debt loans.

          Small farmers may have a hard time but not the big corporate farms.

        • Sit23 says:

          Possibly the speculator merchant banks who have a lot of grain stored around the US are trickling it back into the marketplace at a still far higher price than they paid for it, so the price is trending and staying down a bit, totally unrelated to the world production and transport of grain situation.

    • Crunchy says:

      How would we be able to post food porn pictures of our gruel and weiner water soup? Gotta keep the friends on social media envious!

    • Wisdom Seeker says:

      If Wolf’s NatGas price chart were adjusted for inflation, it would be even more obvious that the economy is perfectly capable of functioning and delivering affordable food now, or even with NatGas prices 2x what they are today.

      Everyone seems to be pushing an agenda, trying to push “fear”, journalistic terrorism.

      The reality is that This Too Shall Pass, because People Figure Stuff Out.

      • NBay says:

        Yes. Water will continue to disappear, the planet will become hotter, and natural resources harder to get.

        People will just add another room to the planet…….we always figure stuff out.

        The only thing that will pass is YOU, after using up a big shitload of everything, and still are.

    • tjackson says:

      Very good points.

    • robert says:

      The threat to nitrogen fertilizer is not the price of natural gas but the actions of governments in restricting the use of such fertilizer, ostensibly to reduce global warming, or climate change, or whatever it is now, by the year 2030.

  2. Dagny says:

    Natural gas futures are called “widow maker” for a good reason :-)

    • ru82 says:

      Yep. A Widow maker. Once this heatwave passes, Nat gas will drop.

      Oil is dropping
      Grains are dropping
      Lumber is dropping
      metals are dropping

      Inflation will drop soon as these are inputs into goods and services

      Housing is dropping
      unemployment claims is slowing increasing

      FED is doing its job in decreasing demand.

      I am reading a lot of articles from the so called “Pros”, that FED will pause this fall. I guess time will tell.

      • David Hall says:

        Natural gas in underground storage was usually depleted during the winter and replenished in the summer. It’s main use is for home heating fuel in the northern states. It is also used to generate electricity and for cooking.

      • Sams says:

        And with bad luck there will be a lot of unemployed, homeless and hungry people with no purchasing power. CPI «inflation» may then even go negative as economy outside finance contracts.

        There will for a while be cheap petrol, food, housing and the lot untill inventory is consumed by the remaining purchasing power. Afterwards the price will be academic as there is not much available.

        Boom and bust, a few civilsations have ended that way.

      • Will V says:

        To call housing “dropping” is a bit premature. The FED is NOT doing its job and needs to roll of MBS faster. Energy inflation spikes and then collapse wont cut it. Housing is shows only very MODEST declines even in bubble fringe areas ( Miami, Phoenix, Denver). Listings are still 50-90% OVER the same per sqft pricing from 2019. The declines are 10% MAX and again only in second home or very bubbly areas. Housing has a LONG way to go to become rational again. The declines are not the same as the tech bubble stocks that Wolf discusses.

        In the Mid Atlantic market PA, MD, NJ, still get bids ABOVE asking. Closing August 5th on a townhouse we are selling and got 15% OVER original asking and it was priced same as prior 6 month sales per sqft. They waived every contingency except mortgage ( even appraisal and they would pay cash to cover the difference). Mortgage rates they had on sales docs 5.25% fixed 30yr. RE is too hot and FED has work to do.

      • Flea says:

        DEFLATION

  3. implicit says:

    Where would we be without NG?
    Most other energy sources have more serious issues like nuclear, oil, and coal; and the cost per unit of energy for “green” energy would bankrupt the lower income people. NG is the greatest fuel available during the long transition period to more earth friendly energy.

    • Russell says:

      implicit – I agree with your assessment completely. You didn’t mention hydrogen but it is basically just a battery (storage device) that converts natural gas using renewable energy.

      • Robert says:

        Russell
        Thanks for mentioning this

        Suncor is getting into this a a big way
        Bob

      • unamused says:

        “You didn’t mention hydrogen but it is basically just a battery (storage device) that converts natural gas using renewable energy.”

        Hydrogen is easily produced by electrolysis, and has been since the 19th century.

        Natural gas is not involved.

        A tank of hydrogen is not a battery.

        • Russell says:

          unamused – You can create hydrogen in many ways. All of them are energy intensive and use more energy to create than the hydrogen provides. Hydrogen is a storage vehicle for energy. It can be used to flatten the curve created by intermittant renewables such as solar and wind. By definition, it is working as a battery.

        • unamused says:

          “By definition, it is working as a battery.”

          There’s nothing galvanic or voltaic about a tank of hydrogen and you cannot apply the Nernst equation to it, therefore it is not a battery. Which is to say, you don’t know what you’re talking about.

          “You can create hydrogen in many ways. All of them are energy intensive and use more energy to create than the hydrogen provides.”

          Which is true of any source of energy. Your argument constitutes the ignoratio elenchi fallacy. Minus ten.

        • Not Sure says:

          Unamused, Russel is absolutely right on this one. Hydrogen is not a source. It’s a storage medium. In all forms of hydrogen production, it takes way more energy to produce than it can deliver.

          We can burn hydrogen as a fuel, or we can have it react in a fuel cell to make electricity which is typically more thermally efficient and thus is the preferred method. What is else is an energy storage device that relies on chemical reactions to store and release electricity? Right, a battery.

          Hydrogen’s utility is not in energy production, it’s in storage. And it’s actually very inefficient, but it’s fairly flexible and has reasonably high energy density. Electrolysis is extremely inefficient, so the vast majority of hydrogen is produced by partially oxidizing methane (natural gas). Though it may make sense to use a clean-ish intermittent source like solar for hydrogen electrolysis and just eat the large inefficiencies in return for hydrogen’s fossil-fuel-like flexibility. We may find that Japan really has it right as they appear to be moving more in the hydrogen direction than battery electric.

        • Ervin says:

          In every way possible the amount of energy per unit of hydrogen is only at least half of the energy needed to manufacture the said hydrogen.

        • unamused says:

          “What is else is an energy storage device that relies on chemical reactions to store and release electricity? Right, a battery.”

          A fuel cell is not a battery either.

          “Hydrogen’s utility is not in energy production, it’s in storage.”

          Whatever that means. If anything. You’re claiming energy storage is somehow unrelated to energy production, which is absurd.

          You flunked English and physics, didn’t you?

        • unamused says:

          Ervin: “In every way possible the amount of energy per unit of hydrogen is only at least half of the energy needed to manufacture the said hydrogen.”

          Wrong.

          Conventional alkaline electrolysis has an efficiency of about 70%.
          Average working efficiencies for PEM electrolysis are around 80%.

          Electrolysis of water – Wikipedia

          Record-breaking hydrogen electrolyzer claims 95% efficiency
          New Atlas: March 16, 2022

        • drg1234 says:

          Unamused,

          You obviously flunked basic reading, specifically the words “storage device”.

          Of course, you know you’re being a pedantic nimrod.

        • drg1234 says:

          Unamused,

          You also clearly flunked basic thermodynamics. You are not including the efficiency loss in turning the hydrogen back into usable work. In most cases that’s limited to the Carnot cycle efficiency, which if memory serves is around 40% at atmospheric temps and pressures.

          Fuel cells may do netter, but haven’t.

          It’s funny when in addition to being pedantic, you’re also wrong.

        • unamused says:

          “Of course, you know you’re being a pedantic nimrod.”

          Translation: “We fossil fuel trolls are hopelessly outclassed.”

          I’m not correcting trolls on unimportant details. I’m correcting your basic information, disinformation, and definitions of words and scientific terms.

          There’s a difference.

        • unamused says:

          drg1234: “You are not including the efficiency loss in turning the hydrogen back into usable work.”

          Which is what you’re not doing when including the efficiency loss in turning fossil fuels into usable work.

          The Tu Quoque fallacy. Minus twenty.

          “Road legal cars are only about 20% to 35% when used to power a car.” – Engine efficiency – Wikipedia

          My Bentley is 70% efficient. You lose!

          The Tu Quoque fallacy. Minus twenty.

        • Not Sure says:

          Unamused,

          I used the word “utility” correctly as a noun. It means, “the state of being useful, profitable, or beneficial.” You could say, “Hydrogen has utility as a medium of storage, but I question the utility of natural gas.” And in the future, you might be careful not to confuse commas and periods in your attacks on my English. The correct statement is, “If anything, you’re claiming…” You said, “If anything. You’re claiming…”

          Natural gas is already produced by natural processes and it contains enough energy to cover it’s own extraction, processing, and transportation with plenty left over to be harnessed by an end user. It is an energy source. Hydrogen takes much more energy to produce than it can deliver, thus it is a medium of storage. That is the simple relation between production and storage that I was pointing out.

          Also, it’s OK if we disagree. No need to attack me personally as I did not attack you.

        • HowNow says:

          I think Unamused’s anger is due to the years and years of sabotage by the oil industry (and their influence over the auto industry) to suppress alternative energy. He’s not the only one who is angry.

        • RH says:

          This is true. However, note the power loss in transmission lines, which are the alternative for power generated in deserts from solar:
          Different power is lost at different stages

          1-2% of energy is lost during the step-up transformer from when the electricity is generated to when it is transmitted.
          2-4% of energy is lost in the transmission lines
          1-2% of energy is lost during the step-down of the transform from the transmission line to distribution.
          4-6% of energy is lost during the distribution

          So, the average loss of power between the power plant and consumers ranges between 8-15%

          This is from chintenergy’s website. I understand the loss is far greater on the very long distance transmission lines that we would need if we created the gigantic, solar farms that Musk recommended, e.g., in the California desert. Then, hydrogen starts to look great as a way to transfer the power generated in the desert in a convenient way with power loss, admittedly, but with distribution to vehicles, after it is cooled.

          As to other uses, compressed air and other energy storage methods are much better: The technology to convert power to hydrogen and back to power has a round-trip efficiency of 18%-46%, according to data that Flora presented from the Massachusetts Institute of Technology and scientific journal Nature Energy. In comparison, two mature long-duration technologies, pumped-storage hydropower and compressed air energy storage, boast round-trip efficiencies of 70%-85% and 42%-67%, respectively.

          This is per spgglobal.

          That may be due to the need to cool hydrogen for it to be transported. The article is unclear.

          Of course, hydrogen generation technology will advance but for now, compressed energy storage (depending on the costs of transporting such cylinders and safety issues) may have the upper hand. The new, alleged, graphite battery also sounds promising and may allow electric vehicles despite the loss of Russian metals and Chinese rare earths. Time will tell if hydrogen generation will advance or other technologies will improve more.

        • Ctcarver says:

          All industrial hydrogen gas is made by steam reformation of methane. CH4 + 2H20 gives CO2 + 2H2. 5% of the world’s supply of natural gas (2% of the world’s annual energy supply) goes into making H2 primarily to make ammonia in the Haber-Bosch process.

          You can produce H2 electrolytically from water, but its not cost effective compared to steam reformation due to large required overpotential and slow kinetics.

          Hydrogen as a fuel suffers from very low energy density when you consider the weight of tanks to store it, or the very high cost of liquefaction.

        • Ctcarver says:

          That should be 4H2 not 2H2. Damn sloppy.

      • Colinsky says:

        Hydrogen is hard to store. Seeps right through most materials as a gas, and is 423° below zero as a liquid.

        • Wisdom Seeker says:

          If the use rate is high then a bit of leakage is acceptable.

          Permanent storage not needed for a fuel that’s being generated and used on an ongoing basis.

    • MarMar says:

      a) We don’t have time for a long transition period
      b) For electricity generation, building new wind turbines is increasingly competitive even with the marginal cost of running existing fossil fuel plants

      • Russell says:

        MarMar

        a) We do have time to transition correctly
        b) New infrastructure needs to have the proper considerations given to impact on local communities and the environment. Correcting one problem and creating a worse one has been done all too many times in the past.

        My primary focus is more on the health of our environment and not on reducing CO2 regardless of the cost. Destroying the environment with windfarms and strip mines has no less a detrimental effect than drill sites and pipelines.

        • unamused says:

          “Destroying the environment with windfarms”

          Windfarms aren’t destroying the environment. That would be your paymasters in the Big Oil Industrial Complex.

        • Escierto says:

          Destroying the environment? Give me a break. Get off the sofa and go to West Texas and see the wind farms. They are beautiful and if anything they enhance the environment.

    • unamused says:

      ‘the cost per unit of energy for “green” energy would bankrupt the lower income people.’

      Wrong. Green energy costs LESS than fossil fuels.

      We’ve been over this before. You’re flacking for the Big Oil Industrial Complex.
      It’s dishonest, and it’s unseemly, and you should be ashamed of yourself.

      • Jeff Tidd says:

        If “renewables” are so awesome, they should go from the current 20% of energy production to 100% in no time…

        • Apple says:

          Probably not. Lack of water is severely impacting hydroelectric. Hoover Dam electrical production is already down 33%.

        • Jak Siemasz says:

          Not with the fossil fuel industry donating huge sums to the legislators who answer to their donors, not their constituents.

      • Russell says:

        unamused – Please provide some data. “Green” energy is currently much more expensive than fossil fuels.

        You don’t prove your point by attacking, you provide facts. What your saying may be true some time in the future. Unfortunately, it is not the case.

        I am not beholden to any industry. I put the environment first. PERIOD.

        • unamused says:

          ‘ “Green” energy is currently much more expensive than fossil fuels.’

          Wrong again.

          The fossil fuel industry get $5 Trillion in subsidies every year. How do you rationalize it being cost-effective?

          You can’t.

          Solar Energy vs. Fossil Fuels – ConsumerAffairs.com
          May 12, 2022 — Electricity from fossil fuels costs between 5 and 17 cents per kilowatt-hour. Solar energy costs average between 3 cents and 6 cents per kilowatt-hour

          Solar and Wind Energy Start to Win on Price vs. Conventional …
          https://www.nytimes.com › … › Energy & Environment
          Nov 23, 2014 — The cost of electricity from wind and solar power plants has plummeted, making it cheaper than coal or natural gas

          Renewable Energy Prices Hit Record Lows – Forbes
          Jan 21, 2020 — Over the last decade, wind energy prices have fallen 70% and solar photovoltaics have fallen 89% on average

          Renewable Energy Is Now The Cheapest Option – Forbes
          Jun 15, 2019 — Onshore wind and solar PV power are now, frequently, less expensive than any fossil-fuel option, without financial assistance.

          Are you being deliberately dishonest or are you really that ignorant? Choose one or both.

        • Anthony A. says:

          “The fossil fuel industry get $5 Trillion in subsidies every year.”

          I’d sure like to see a breakdown of those subsidies. Thank you!

        • Apple says:

          Only 8% is direct payments, the rest are tax breaks and most importantly being able to walk away from damage to the environment and people.

          All your employees just got black lung ? Just declare bankruptcy and walk away.

        • Venkarel says:

          The rest are indirect subsidies, “Just 8 percent of the 2020 subsidy reflects undercharging for supply costs (explicit subsidies) and 92 percent for undercharging for environmental costs and foregone consumption taxes (implicit subsidies).”
          https://www.imf.org/en/Publications/WP/Issues/2021/09/23/Still-Not-Getting-Energy-Prices-Right-A-Global-and-Country-Update-of-Fossil-Fuel-Subsidies-466004

        • Venkarel says:

          Also keep in mind this is worldwide not just U.S.A.

        • ru82 says:

          It will not matter what green energy costs. The Government will subsidize it at the end of the day.

          Sell some green energy bonds to fund private buildouts of wind farms or solar farms to Warren Buffet or GM and then let the tax payers pay it off or have the Fed buy the bonds.

          That seems to be the playbook lately

      • Not Sure says:

        Green energy production cost varies wildly depending on the source. But even assuming green energy sources are much cheaper, you’re ignoring the fact that storage alone is easily expensive enough to crush the peasants.

        The cost to build and maintain storage is still a problem. Battery technology still needs significant improvement on both energy density and cost, PLUS we need time to build out the required infrastructure to support those green sources. I’d love to see carbon-free energy become the standard, but Oil/NG is still king, and it’s going to take decades to change that fact.

        Germany was touted as being such a revolutionary leader in green energy adoption. It’s quickly becoming clear just how insufficient that position is. Solar and wind are great for progressive bragging rights, but still useless when called upon for the consistent, reliable baseload generation and flexible mobility methods needed to maintain Germany’s status as Europe’s manufacturing powerhouse.

        • unamused says:

          “Solar and wind are great for progressive bragging rights”

          Thanks for letting us know that your position is based on right-wing ideology, and not rational.

          “Green energy production cost varies wildly depending on the source.”

          True of anything. Another ignoratio elenchi fallacy.

          Minus ten.

        • Spaceman says:

          Not Sure

          Thank you. Your comments are spot on and you did it with out calling anyone names. It’s no wonder why as a country we continue to stumble finding a direction to our energy needs. The saying that “college doesn’t make you any smarter but it does put more tools in your tool bag” and you’re either born with common sense or your not is abundantly clear after reading through some of the comments. Their tool bags may be full or they may not be, but either way they’re not smart enough to know how to use what they have at their disposal. Instead they act like children and resort to name calling.

        • Jak Siemasz says:

          Shilling for the FFI…tsk, tsk.

      • Happy1 says:

        Unfortunately solar and wind energy are variable in output depending on sunshine and wind, they aren’t a stable base for a reliable grid, there will always be a need for power generation from gas or nuclear or other more stable sources.

        • Sams says:

          Well, solar power is reasonable predictable. Only places with quickly changing cloud base solar power will be less predictable.

          Time for Sunrise and sunset is known at all locations and if the localisation have å predictable weather pattern tomorrows output will mostly be known.

  4. Michael Engel says:

    1) After spending $21B on Speedways 7-Eleven cut 900 jobs, despite
    $100-$130 oil, because traffic is slow and wages are too high for them.
    2) USD/JPY went vertically up, the strong dollar should come back home
    to Japan, but Speedways is a flop.
    3) CA is 7-Eleven biggest flop. 7-Eleven have 67,000 stores world wide, 16,000 in US.
    4) Natgas is rising because Germany is lifting it’s reserves from 60% to 90%, using what they got, starving consumers, during a heat wave.
    5) The Dow completed it’s S-wave to Feb 2020 high. It retrace less than 38%. The Nasdaq only 24%.
    6) Natgas backbone is Apr 18/25 2022, $7.37/$6.47. Natgas @$8.37 a
    lower high, above BB.
    7) If Nerd supply is uninterruped and the German reserve are gradually
    depleted, natgas price might drop next winter to $5.

    • Djreef says:

      This is what climate change does.

      • RC says:

        Shocker!!! Seriously who is surprised by this??

      • Anthony A. says:

        Wait! …….We are discussing natural gas pricing here, not climate change.

        If you are interested in climate change, go read up on “The Great Dying”, aka the Permian-Triassic Extinction event. Sure, it happened 251 Million years ago, but it was an exciting time via climate change (and man wasn’t here yet).

        • NBay says:

          It’s fitting that after all that pseudo science and word salad, that a true champion for fossil fuel has the last word.

          Btw; there is trillions of trillions of times more hydrogen than any other element in the universe.

          Batteries, batteries, everywhere and not one to hook up to!

          I think that is the stupid comment that started this.

          (not to take anything away from AA)….I present his above climate change example as evidence

  5. Robert says:

    WOLF
    Thank YOU for all that you do to help us
    Bob

  6. Michael Engel says:

    The grain deal will make JP and beer mug winners happy. Lower food
    inflation, higher SPX.

  7. CreditGB says:

    “The Federal Energy Regulatory Commission (FERC) said on Tuesday that it would inspect the plant in September.”

    “SEPTEMBER??!!!” Maybe like France, August is for “holidays” and all closes down.

    These incompetent bureaucrat parasites need to be fired immediately. If what is becoming a national energy emergency can’t get them on site within 48 hours with a crash team to get this facility reopened, then they are useless foot draggers. Likely on purpose.

    In the private sector, they’d be long gone already with their replacements on site in trailers working a 24/7 schedule until the facility is returned to service.

    Now, lets have all the apologists comment with their oh so reasonable points of reason for such delays.

    • Anthony A. says:

      The Pres needs to get on this as we won’t be able to supply the EU with all their natural gas need next year (like he promised) if this plant is not operational.

    • Nate says:

      August might be a Western Europe or European thing. When I was in Italy everything was dead except the big tourist spots. Like whole country went to Capri or Cinque Terra.

      • Anthony says:

        That’s because many European schools break up later than the US, around the 20th July and go back first week of September. The average summer school break in Europe is six weeks, so that makes August vacation time…..

    • Wisdom Seeker says:

      Maybe, just maybe, the LNG plant won’t even be ready for inspection until September?

      Also, this plant is for exporting LNG, not producing it.

      • LifeSupportSystem4aVote says:

        They don’t produce the natural gas, but they have three liquefaction trains to produce LNG from the natural gas. From their website:

        “The daily LNG output from Freeport LNG’s three liquefaction trains is enough to power and light a metropolitan area the size of San Antonio for an entire day.

        The combination of ample reserves and low prices create excellent conditions for the U.S. gas market to become a source for LNG exports.

        Given the market’s reversal, Freeport LNG has launched its liquefaction project to add over 15 mtpa (equivalent to approximately 2.2 Bcf of gas per day) of liquefaction capacity to its Quintana Island facilities. The terminal is now becoming the largest point of demand for natural gas in Texas.”

    • Sergio says:

      One possible reason for the federal sloth in inspecting is the upcoming election. By increasing nat gas supply in the US (delaying its export to Europe as lng), price is pressured down along with the cpi inflation rate, whose high current level is costing potus electability. Like the FBI and Homeland Security, other federal agencies are becoming overly politicized. It’s damaging to the republic and property rights, not just to Freeport LNG, in a terribly cynical way.

    • Wolf Richter says:

      Before the FERC can inspect, the company has to fix… there is a problem that caused this fire to happen. It’s not like putting in a new grommet. Something malfunctioned. And there is a lot of natural gas involved at these plants, so you don’t want to blow up a whole area.

      Folks, don’t go overboard with BS.

      • Spaceman says:

        Wolf

        The processes involved in producing liquid methane are very complex. It starts by removing all of the impurities in the inlet feed stream (water vapor, propane, butane, etc). A small amount of water can upset the entire process. The dry methane must then be lowered to ~365 degrees Fahrenheit in order to turn it into a liquid if memory serves me right. The process equipment (cryogenic) involved is very complex and spare parts are typically not readily available. A high speed turbine or an exchanger can cost thousands if not hundreds of thousands of dollars and may have to be built to order and take months before it arrives on sight. I’m talking from experience. I was a plant operator and warehouse supervisor at one of only seven plants in the world at the time that produced helium in gas/liquid form as well as liquid methane/natural gas, y mix (propane, butane, ethane), crude oil and sulfur back in the 90’s. You are correct in your comments above. Very few people fully understand what it takes to produce the energy they take for granted.

        • eg says:

          Most readers live in “spreadsheet land” which as you point out is only tangentially related to “real physical things land,” Spaceman.

          The latter has a nasty habit of blowing up the former.

  8. ru82 says:

    Verizon down big today… a few days after AT&T. I guess the German TMobile is kicking the American cellular companies butts.

    TMobile pays it CEO less than AT&T even though AT&T CEOs make huge gambles that loose tens of billions of dollars. Amazing.

  9. Marty Milner says:

    They dry grain with Nat Gas too. This demand will also increase with the current situation. I got into $BOIL three weeks ago and exited today. Markets are resilient and traders tend to take profits.

  10. Rent Slave says:

    Alot of scientists on this thread.

  11. Michael Engel says:

    Are we in depression : SPXA50R – stocks above dma50 – dived to 0.80
    in June 13 2022, the deepest dive, a world record, under Mar 2020 low.
    Yes, we are depressed, very much so.

  12. Nate says:

    Great news for natural gas companies, employees, and their shareholders. Sucks for the rest of us. Not sure if the terminals get any fed/state government subsidies. Hope not.

  13. Ben Sargent says:

    NG a very volatile commodity in the USA with many factors.
    Supply constraint by pipelines and drilling activity and available capital.
    Demand components with no alternative should there be demand disruptions or constraints.
    LNG capacity, LNG overloading capacity, export pipelines, weather, and rapid decode of resource of capital dries up. Inflation and demand destruction. The commodity may follow some trading indicators but the ultimate price of course lands someplace between the oversupply low from the shale resources and the quest for more resources and waiting on the demand as LNG globally grows to meet supply. I do agree we can easily see $5/mmbtu and less. Futures out year prices are in the $4.00 range when I checked a couple of months ago.
    As cost of supply rises and margins shrink suppply with drop and prices will escalate higher than inflation.

  14. Ben Sargent says:

    As exiting power contracts expire and the hedging for short term low priced NG expires we will see higher power pricing.
    Very similar to the price of diesel and gasoline as we transition too rapidly to wind and solar (unfortunately but happening) the demand for NG and coal will diminish and prices will escalate due to lack of supply. Companies won’t drill if there is no demand domestically only long export leaving the highest cost power for peak demand needing the highest cost spot price of NG.

    • NBay says:

      Har Har! That’s a new one!
      But maybe some scoundrel will tamper with the free market and unknowingly save us all?…..ya never know.

  15. Halibut says:

    I’m one of those fortunate people who like my job, sir. Got my first chemistry set when I was seven, blew my eyebrows off, we never saw the cat again, been into it ever since.

    Meanwhile, back at the ranch, that flaming orb in the sky has my pool temp just perfect.

    So, call me a nimrod or a troll. Or whatever. I’m just gonna fix a highball and not freak out about how the ice got made.

  16. Immutable says:

    Is the comment war over yet?

    • Halibut says:

      Didn’t I just ask that? I thought I did ;-)

    • Anthony A. says:

      I hope so, too much shouting and screaming going on. Since I spent 9/10’s of my career in oil & gas operations, I look forward to these articles. Thanks, Wolf, for the unbiased reporting on these topics.

  17. drowningfish says:

    Eventually macroeconomic factors will preponderate these temporary ones. if the economy falls into a recession, then surely NG prices will tumble.

  18. rjs says:

    Freeport just bought us one more winter; if not for Freeport, working gas in storage would be looking pretty dim for mid-July…

  19. Depth Charge says:

    Too many speculators and too much speculation. With the rise of the super-rich the entire system has been destabilized, as their increased wealth leads to larger price swings as they play around with the necessities of life.

    • robert says:

      For every spec win there’s a spec loss on the other side, so super-rich greedy spec score is neutral. This includes funds using OPM, i.e. ‘the little guys’ money’. For every contract somebody takes the other side.
      Actual producers and consumers of the commodity get predictability for financial forecasts and stability, unless of course they take the wrong side (speculating) instead of hedging, like they should.

      • Sams says:

        Actual producers and consumers may actually get hurt in the speculation.

        If the future price of food before the sowing season due to speculation is below production cost the farmer may not sow at all. Selling on the future contract the farmer will lose money and few will help financing the next crop then.

        The farmer can select to not sell on the future but do then take the risk himself. Playing safe he then only sow what he is sure to sell. Hedging to producers is to reduce production.

        The same applies for other industries. As producers the best hedging is to reduce production to be sure to sell with a profit.

  20. creditGB says:

    I wonder what the relationship is between NG used for summer electric power generation for AC, vs winter use for heating? Volume of gas usage would be the measure I’d be interested inseeing.
    What if the cold December snap we are starting to hear about occurs right on the heels of the summer heat, keeping demand high through next spring? What happens to prices then? Up up and away!

  21. CCCB says:

    Both peak AC and peak Heating seasons cause runups in natgas prices.

    Wait til winter rolls around and Europe is in the deep freeze with no Putin gas to stay warm. We’ll see the opposite of the 2021 negative oil prices as companies fight over cargos at any price to export across the Atlantic

  22. Warren says:

    When all of the commodity prices dropped at the same time this past month, I highly suspected nefarious market manipulation. It’s certainly not what one would expect from a free market economy. I held onto my various commodity stocks as obvious market manipulation cannot be sustained. We need all forms of green energy, blue energy, and gray energy, and the various minerals that support energy generation, transportation, and storage. The government and big corporations that try to manipulate the commodity markets cannot pick winners and losers without unintended consequences. We cannot change the climate.

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