I noted last week that the Planet Earth gas price has collapsed. This week I can confirm that the Planet Earth gas price has fallen to all new lows.
Meanwhile, through the worm hole, on the far flung asteroid called Australia, gas prices remain at historic highs.
The drivers of the global collapse are manifold. European gas storages are literally overflowing headed into winter as Russian, Norwegian and US gas fight over market share:
The price there is roughly $4.30mmBtu, the lowest since the 2009 great recession.
In the US, despite surging exports, the local price is also cratered at $3.60mmBtu, within price ranges lows in force since 1991.
In Asia, which imports massive quantities of gas from everywhere, the import price is today at $6.20mmBtu, prices last seen in 2001, even as we enter the demand peak season.
The key driver has been the takeoff of US LNG which has flooded European gas markets and displaced other gas to Asia:
Note that the US ramp up of volumes is only about half over at 45mtpa. And it has another 200mtpa in proposed export capacity! So there is no end in sight for low prices. Not for as far as the eye can see:
Yet through the worm hole, on the far flung Australian asteroid, gas prices remain at $10-11mmBtu for long term supply. This is quite strange given huge volumes of gas come out of asteroid geology at $1-3mmBtu and are sold into Asia for $6.20mmBtu.
But the ‘roid (as it is known affectionately in the oil business) had given all of its gas reserves to an export cartel which now set prices as it pleased. The cartel had an agreement with the asteroid government to supply gas at under $5mmBtu, called the Australian Domestic Gas Security Mechanism (ADGSM), but both just ignored it because the denizens of the small asteroid were brain damaged from lack of oxygen and weak gravity. None more so than in QLD, via The Australian:
The Queensland government has called an urgent meeting with major energy producers, unions and state-owned producers to resolve a national policy vacuum, threatening to break away by developing its own solutions to high prices and electricity market reforms.
Amid unprecedented volatility in the national power grid, high gas prices and agitation among states for greater action on cutting emissions, Queensland Energy Minister Anthony Lynham will hold a high-level meeting on Thursday to address pressing industry issues.
“Queensland has led the nation on gas policy, going it alone to increase domestic supply. If Angus Taylor isn’t going to work on energy policy, including prices, then we’ll do it in Queensland with our stakeholders.”
Except for the tiny, little detail that it was QLD governments that rushed to approve the export cartel, which is based on the QLD side of asteroid, with no reservation of its reserves, and made a considerable contribution to the entire mess in the first place. Breaking up the asteroid into little pieces for the cartel to devour one at a time was clearly not going to help anything.
There were proposals to funnel cheap Planet Earth gas though the worm hole to the ‘roid but the lack of competitive pressures ensured that it was only being offered at $11mmBtu as well. Not to mention that the ‘roid’s own vast and cheap gas reserves were simply going to orbit the rock at 1100% mark-up before returning to itself, if such a deal were done. But that did not stop some roiders from championing the notion, via the AFR:
As EnergyQuest noted, east coast gas consumption through the June quarter sank to its lowest levels for more than a decade on the back of short-term gas prices that were generally higher quarter-on-quarter.
…“The case for LNG imports is becoming more urgent as one of the benefits of FSRU’s [floating storage and re-gasification units] is that they provide good swing gas for winter and peak days, and duplicate long-distance pipeline infrastructure,” EmnergyQuest identified.
“As the expected short fall of gas supply around the mid-2020’s approaches, peak season and day constraints will become more challenging,” it said.
It is interesting to note, too, that because gas fired power set the marginal cost of electricity on the ‘roid, its household and business power costs had also skyrocketed, even as everybody wondered why there was so little consumption demand or investment.
Back on Planet Earth, a few fringe NGOs were established by emigrant roiders who had recovered some cognitive capacity in Earth’s oxygen-rich atmosphere. They aimed to aid the lobotomised roiders with domestic gas reservation.
But they made little headway given the huge profits on offer, and the roiders were left to wander in drooling circles, unable to fathom why they had no money left to spend, even as energy prices crashed across neighboring Planet Earth.
