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Gas Prices to Decrease
Barring unforeseen weather events, expert says price should level off
If natural gas storage continues to increase, prices should level off toward the beginning of November, says Tim Carr, Head of the Petroleum Research Section, Lawrence, Kan.
“Natural gas prices have remained higher than the long-term average throughout the summer as utilities have refilled storage,” Carr says. “Last winter, supplies nearly went dry so prices were high, and companies have been trying to refill storage since – continuing to keep prices high.
According to the monthly U.S. natural gas stocks report from the U.S. Department of Energy, there has been a strong price incentive that encouraged natural gas storage over present consumption. The result should be continued downside pressure on natural gas futures and current natural gas prices.
“However, the early snap of cold weather in the Midwest and East should help support prices,” Carr notes. “In the next few weeks, it will be interesting to see if the weather slows down the string of record injection rates. Barring unforeseen happenings, we should make it to full storage. We only have to maintain average injection rates into storage – almost a slam dunk.
Since natural gas is the major component of nitrogen fertilizers and a widely used energy source for irrigation systems, producers can evaluate plans to change their cropping decisions based on these input prices, notes Jim Gleason, Regional Vice President of Crop Quest, and based in St. John, Kan.
Some producers have chosen to plant wheat as an alternative to planting a row crop next spring, Gleason says. The water requirements are less as well as the amount of nitrogen that it takes. Other producers are starting to evaluate if they need to change their irrigation motors to a different energy source like diesel fuel.
Gleason says that more producers in the region have been switching to more efficient diesel engines.
“There are some pretty efficient engines that run on 2 to 3 gallons of fuel an hour, Gleason says. The real deciding factor is if the existing motor is worn out and needs to be replaced.
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