Tuesday, June 5, 2012

NatGas is dirt cheap! Too cheap...

Nat Gas is under $2.50 per MBTU. Problem is... it costs maybe $8 MBTU to drill...

4 comments:

  1. This guy is a pretty interesting finance blogger; seems to know what he's talking about.

    I know LR and others had expressed some interest in the economics of drilling; this kind of data reinforces my suspicion that while hydrocarbon energy is increasingly available in the US, it won't necessarily be cheap long term.

    Gluts and shortages will continue to create big price swings.

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  2. I wonder how the price of natural gas by fracking compares to that of undersea drilling, especially since huge natgas fields have been discovered off Israel's coast.

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    1. I have to believe fracking is cheaper - but it might depend on how deep the water is, too. (So, um, basically... I have no idea).

      The natgas market is very local - 'cause the stuff doesn't ship easily or cheaply (compared to oil, which is mostly a global, fungible market). So what's "economical" for Israel is pretty dependent on local prices. Which, given the situation with Egypt et al, are probably not at 10 year lows (like they are in the US).

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    2. At 10 year high if anything. Electricity prices are going up and up, the electric company has lost billions of shekels, and all because of the Egyptian oil embargo on Israel. We're having to import oil and coal from all over the world to make up the shortfall.

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