So About That ‘Nat Gas Revolution’…..

always chuckle when I see articles or pundits talking about how “wonderful” fracking is, and how “profitable” it will be.
On the contrary side, I also chuckle when I hear people talk about how much money they’ll “save” converting to natural gas, as if such is a sure thing.
Why? Well, right here is “Exhibit A”:
As you can see very large changes in the price of natural gas are normal. Natural gas is a somewhat-local commodity; unlike many others it is very difficult to ship it across oceans (the simplest and most-economic means of transport is by pipeline) and as a consequence the market for it tends to be concentrated within a given landmass. This in turn means that supply in, for instance, Russia has little or no impact on the price of the commodity here in the United States, and vice-versa.
There are those clowns that have tried to argue that converting trucks, for example, to LNG is a good idea. Well, diesel fuel has been materially-elevated in price compared against history for quite some time. But how would you like to try to plan your cost of operation as a trucking company if the cost of the fuel to run the trucks commonly varied by a factor of three, and over the last 30 years has varied by a factor of ten, with many large excursions in price exceeding 100%?

This post was published at Market-Ticker on 2014-12-26.