Subscribe to our free, weekly email newsletter!



Natural gas prices need to be closely watched

By Jeff Berman, Group News Editor
May 21, 2012

Natural gas as a potential long-term energy source is a topic that has received a good amount of attention in the pages of LM and on this Web site.

In reviewing some of our coverage, it really does appear natural gas has a lot going for it at the end of the day, whether it be an attractive price point, a very strong domestic surplus, and, as observed by no less an authority than T. Boone Pickens, it switching to natural gas as a transportation fuel and for power generation can replace more than one-third of U.S. foreign oil imports in ten years.

Those points—individually and collectively—present a very compelling case for natural gas usage. Of course, a mainstream switch to natural gas requires a very significant investment for all involved, especially when it comes to getting significant infrastructure in place i.e. fueling stations, natural gas-powered trucks, and other things, too.

That said, this leads me to a recent report about natural gas and its role in transportation I came across in the Financial Times (FT) last week.

The FT report leads off by explaining that Royal Dutch Shell expects U.S. natural gas prices to double by 2015, as they rebound from the ten-year lows due to the shale gas boom at a time when U.S.-based demand for natural gas continues to rise.

Prices doubling? That would put it above current prices for diesel for sure, given that most estimates peg natural gas at about 40 percent less than regular fuel. Suddenly, it is not looking like much of a bargain.

Royal Dutch Shell CEO Peter Voser told the FT gas demand in the US would rise “as coal is replaced by gas in electricity generation, and gas in transportation takes off”. He added that the low price would push some producers to curtail output, allowing the price to rise.

It goes without saying that nobody knows for certain how this natural gas thing will play out. We can try to answer that in a few years.

All we can go off of—for now—is that prices remain low and attractive. And while prices are low, it is not like people are running out o switch over right this second. But even with prices being expected to increase, as noted in the FT report, there is more to like than not, when gauging the market outlook.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

The PMI, the ISM’s index to measure growth, increased 1.8 percent to 57.1 in July. This is 1.8 percent higher than the 12-month average of 55.3. The PMI has grown in 18 of the last 20 months, with economic activity in the manufacturing sector expanding for the last 14 months as the overall economy was up for the 62nd consecutive month.

YRC Worldwide, whose regional and long-haul units provide the second-largest LTL capacity in the trucking industry, narrowed its second-quarter loss to $4.9 million on $1.32 billion revenue, compared with $15.1 million loss on $1.24 billion revenue in the year-ago quarter.

With NFL training camps in full swing, it stands to reason that Congress must be replete with football fans, given how it basically has elected to punt on federal transportation funding yet again, with the Senate yesterday signing off on a ten-month bill to keep federal surface transportation funding intact through May 2015 through a nearly $11 billion stopgap measure.

Carload volumes were up 4.3 percent at 306,988, and intermodal volume for the week ending July 26 was up 3.3 percent at 264,809

Lyon, France-based Norbert Dentressangle, a $5.5 billion global third-party logistics (3PL) services provider focused on global logistics, transport, ocean, and air services, said today it has acquired Des Moines, Iowa-based Jacobson Companies, a value-added warehousing (VAW) company, for $750 million from private equity firm Oak Hill Capital Partners.

Article Topics

Blogs · Natural Gas · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA