On Energy Source this week:
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The natural gas glut is not going anywhere. The gas-oil correlation has wilted, natural gas BTUs in the US cost about a third of oil BTUs, and the EIA estimates this week counted another rise in storage to 2.952 Tcf.
Stephen Schork pointed out that while the year-on-year surplus in the producing area had been narrowing and would continue to do so through August, last summer’s production was book-ended by shut-ins. If the storm activity that ended last season didn’t materialise, historical storage highs could be reached later this year:
The Gulf Coast is currently afloat on a cushion of gas, 1,043 Bcf. For instance, supplies are now 6% or 60 Bcf above the end-of-season (mid November) 5-year interpolated norm and within 3% of the all-time high, 1,073 Bcf. Injections need only average 16% of the 5-year average between now and November to hit this high.
Of all energy policy, anything affecting how much people pay to drive ranks among the most politically sensitive. Just ask Steven Chu, who admitted raising US petrol taxes was not politically feasible, despite his belief that such a move would reduce carbon emissions and energy dependency.
Despite this, politicians in both the UK and the US spoke have spoken this week about different approaches to raising revenue for roads and changing driving behaviours. While some innovative ideas were suggested, it also serves to underline just how what a difficult area this is. Never mind getting popular support for changing or reducing vehicle use; even getting drivers to pay for roads is difficult enough.
The BBC was this morning led with the MPs’ cross-party transport committee, which said the whole concept of environmental taxes had been “damaged” by the handling of a proposed rise in vehicle excise for the highest polluting cars. Read more
Crude oil prices rose on Friday while gold held above the $950 mark and concerns about supply problems continued to support sugar prices as commodity markets headed for a strong finish to the trading week.
In energy markets, Nymex September West Texas Intermediate rose 5 cents to $67.22 a barrel. Weak US demand conditions, apparent in the weekly inventories data that were released on Wednesday, weighed on WTI, which traded at a substantial discount of more than $2.20 to Brent. Read more