Price of Gas on Thursday Closing, $3.65, went up 0.15 on Friday to close at $3.80,(+ 4.19%), you may think, winter fluctuations, warmer periods prices decline,..
Understood, Nat Gas is seldom used in US East coast, heating OIL is the preferred heating fuel, Gas is used Chicago and West, with some entire cities in newer developed states like Florida having very expensive underground grids intracity of pipelines buried about a foot, below freezing line on ground, to deliver it to homes and businesses at a constant rate.
From literature you learn, there are estimates that point to cost of extraction at over $5. I witness at sites in No, Dakota inspecting oil rigs, that gas if found during oil drilling, and later extraction, is burned right on site. No easy or efficient way to store it or bring it to retail outlets economically.
You study physical characteristics of the gas, you find it is odorless, lighter than air (rises), and has the highest explosive range of all known gases. Must be stored and handled supercooled, transportation, shipping in regular gas containing trailers impossible, it blows up.
Shipping it to Coasts terminals requires either established pipelines, or cooled special container vehicles, normal in the eastern block countries like Russia, absent in US and western Canada.
Special transfer and cooling Terminals with explosion proof environments and bonding/grounding requirements are needed for the cooling operation before shipping, as far as I know there are only two built on the West Coast.
Shipping cannot be conducted in regular vessels carrying close containers, the Ocean waves promote rocking of the large ships, creating conditions for explosions in transit, physical characteristics and static normally created on container inside walls, sufficient to create explosions.
Special refrigerated ships with circular dome type tanks are required, vessels in cylindrical shapes normally utilized for propane, and similar gases, not recommended for handling natural gas. We have no ships right now, lots of talk and plans here, US West Coast, and in Canada, but no investments or orders yet.
So the picture is not so good for extraction, to generate a profit price would have to exceed ~ $6.50 to $7.00, I guess record levels for many years. Hard to convey and transport out of wells, in most cases contains Methane, also explosive, comes tainted with Sulfur, extremely harmful to well workers, environmentally carries other problems, CO2 is exhausted at well.. expensive complexity.
India is unhappy paying about $8 per NatGas unit used there, we couldn't deliver it there for that price, costs of retrieving, transport, special compressing, cooling, and finally terminal filling, would be astronomical, add special ships to be built in future, it is DREAMS, and people LOVE dreams.
Now lets get technical; if you look at periodic charts for the last 10 years you will find price movements 3 to 4 times per year. The gas responds to winter demand 'normal' price fluctuations, but never a couple dollars higher. So, when you see parabolic moves, and suddenly a drop below initial levels, you get worried, foul play.
It is done mainly approaching Winter, very logical, press releases will start the price elevation (NYSE:PUMP), perhaps news about harsh winter conditions around New England, Buffalo, and other colder winter places in the NE Region of US. What they don't tell you, is that NatGas is not used for heating there. Heating OIL is used.
Prices start elevating under $4 now, this time was $3.85, used to be below $3, it doesn't matter, producers and retailers cannot make a profit dispensing and selling it.
Prices go up over $5, and suddenly drop (DUMP), someone makes a lot of money, about 33% on investment in a short few weeks, most traders get stuck at higher prices, dead money for a while.
If you were affected in this last round from $3.70's to around $4.50 and you bought at the high, you may get a chance to break even, another 'get the fools' round may start soon.
Do check the charts, note the unusual parabolic shape of rises, and sudden drops, investigate facts on production and shipping requirements, due diligence in all investments is required by all of us, Greed is only 'good' in that great Wall Street movie.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.