Shepstone Management Company, Inc.
Colder weather? Who knew? The EIA says natural gas use is going up this winter due to this yet again “unexpected” development.
The EIA put out a seemingly innocuous Today In Energy post yesterday about projected gas use this winter but it contained a somewhat surprising admission; it’s expected to be colder. I thought winters were getting warmer and gas use was going down. That’s what the supposed green energy, global warming, politically correct experts keep telling us, after all.
But, no, the EIA says cold weather is ahead, gas is cheap, COVID is making more of us stay home and we’re about to use more gas to stay warm. None of this is a surprise to anyone who understands commodity markets, human nature or weather, of course, but it has to be a shock to our fossil fuel hating friends.
Here is some of what the EIA had to say:
In the October 2020 Short-Term Energy Outlook, the U.S. Energy Information Administration (EIA) forecasts that residential natural gas consumption for the 2020–21 winter season (October–March) will average 21.1 billion cubic feet per day (Bcf/d), 5% more than last winter. EIA expects more residential natural gas consumption because of forecasts for colder temperatures this winter and changes in consumer behavior.
Based on a colder weather forecast from the National Oceanic and Atmospheric Administration (NOAA), EIA expects the 2020–21 winter to average 602 heating degree days (HDDs), which is nearly equal to the average of the previous 10 winters and 5% more HDDs than last winter. Population-weighted HDDs measure temperature deviations from 65 degrees Fahrenheit and are used to estimate demand for heating fuels.
Changes in consumer behavior in reaction to the COVID-19 pandemic will also contribute to more residential consumption of natural gas this winter. EIA expects work-from-home and virtual schooling policies to affect winter residential consumption because, with more people at home during the day, residential space heating demand will increase compared with last winter.
Nearly half of all U.S. homes are primarily heated with natural gas. As forecast in EIA’s Winter Fuels Outlook, the average retail price of residential natural gas this winter for homes that primarily use natural gas for heating will average $9.55 per thousand cubic feet (Mcf), down 2% from $9.73/Mcf last winter. The lower average residential price of natural gas reflects generally lower natural gas spot prices in 2020.
Who knew we could still get colder weather? Who knew low prices increase demand? Who knew natural gas was something we can depend on to keep us warm during long winters when we have to stay mostly inside? Most of us knew, of course. The only people surprised are those are invested in ideology rather than common sense and facts.
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