• 4 minutes Europeans and Americans are beginning to see the results of depending on renewables.
  • 7 minutes Is China Rising or Falling? Has it Enraged the World and Lost its Way? How is their Economy Doing?
  • 13 minutes NordStream2
  • 2 hours Monday 9/13 - "High Natural Gas Prices Today Will Send U.S. Production Soaring Next Year" by Irina Slav
  • 19 hours California to ban gasoline for lawn mowers, chain saws, leaf blowers, off road equipment, etc.
  • 21 hours "Here is The Hidden $150 Trillion Agenda Behind The "Crusade" Against Climate Change" - Zero Hedge re: Bank of America REPORT
  • 20 mins GREEN NEW DEAL = BLIZZARD OF LIES
  • 4 days "A Very Predictable Global Energy Crisis" by Irina Slav --- MUST READ
  • 1 day U.S. : Employers Can Buy Retirement Security for $2.64 an Hour
  • 2 days Nord Stream - US/German consultations
  • 37 mins Class Act: Bet You've Never Seen A President Do This.
  • 4 days An Indian Opinion on What is Going on in China
  • 4 days Can Technology Keep Coal Plants Alive and Well?
  • 1 day Australia sues Neoen for lack of power from its Tesla battery
  • 23 hours Forecasts for Natural Gas
  • 4 days Storage of gas cylinders
  • 5 days Two Good and Plausible Ideas about Saving Water and Redirecting it to Where it is Needed.

Breaking News:

Japan Asks OPEC For More Oil

Michael McDonald

Michael McDonald

Michael is an assistant professor of finance and a frequent consultant to companies regarding capital structure decisions and investments. He holds a PhD in finance…

More Info

Premium Content

Why $25 NatGas Is Possible This Winter

For families using natural gas in their homes, this could be an expensive winter... or a cold one without heat. New England consumes the most liquid natural gas (LNGs) out of anywhere in North America primarily due to high population density and colder climate. Historically, the price of LNG rises in correlation to snow storms. Because of bottlenecks in the pipelines for LNG, supply is limited in the North East and a demand surge can cause a spike in price.

In 2015, there were only 6 million homes that use traditional heating oil in New England, whereas nearly half of households in the United States use natural gas. Towns that don’t run gas pipelines could also have propane delivered. The pipeline bottleneck is unfortunate for New Englanders who use natural gas especially during a time when prices are exceedingly low. Demand for LNGs is at an all time high and low crude oil prices is suppressing the value further to a spot price around $2.70 per mmbtu. Natural gas reliance is only increasing with the continued effort by the United States to shut down coal plants. For natural gas users, locking in at a low price is highly sensible, or simply buying more blankets.

Consolidated Edison, Inc. is a public company that invests significantly in natural gas transmission projects. They believe natural gas prices could rise to as much as $20-25 mmbtu this winter in the North East. Investors should be on the watch to see how the company reacts over the season and how their projects pan out.

Spectra Energy Corp. is currently working on expanding the Algonquin Pipeline, allowing it to carry 342 million cubic feet of natural gas per day to Boston and surrounding cities. The $876 million project is being met with considerable roadblocks from protestors and a potential conflict of interest among those at the Federal Energy Regulatory Commission (FERC) who approved the plan for the project. Related: OPEC’s Gloomy Long-Term Outlook For Oil Markets

(Click to enlarge)

Source: Spectra Energy Corp.

When the project is completed later this month, Spectra shares will likely rise. Engie SA regularly makes LNG tanker deliveries into Boston, helping reduce the strain on the pipelines. Spectra is indirectly competing with Engie and if they’re able to reduce Engie’s obligation in New England then the France based company’s shares could drop.

With all of this expected volatility, call options are a strong investment choice in the market for natural gas. Investors should look at the weather forecast to better predict when these spikes will occur and react accordingly. Spreads between the spot rate for Algonquin pipeline and Henry Hub could also earn high yields. Other natural gas suppliers will profit if prices rise as high as Consolidated Edison predicts.

By Michael McDonald of Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment
  • Oilracle on November 09 2016 said:
    --"The $876 million project is being met with considerable roadblocks from protestors"--

    We shall see if Russia and the Saudis will continue financing the anti-energy motley groups inside the USA
  • R. L. Hails Sr. P. E. (ret.) on November 10 2016 said:
    There are powerful anti- carbon political forces in New England, NE. They killed coal power plants. They killed nuclear power plants. They killed pipe lines which import liquid and gaseous carbon fuels to NE.

    It gets cold every winter in NE. When there is not much supply, prices go up. When prices go up, companies which rely on cheap fuel go broke or leave the area.

    The above has been this way for generations in NE.

    When people are cold and hungry, things will change but obviously not before.

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News