Some Are Expecting "Rolling Brownouts" Or "Blackouts"

“The following is an excerpt from Tim Snyder’s “Weekly Quick Facts” newsletter. Tim is an accomplished economist with a deep understanding of applied economics in energy. We encourage you to visit Matador Economics and learn more about Tim. While there, you can sign up for his completely free Daily Energy Briefs and Weekly Quick Facts newsletters.”

Brownouts and blackouts are terms that describe the gradient of power loss, from limited in scale and time and transitioning to total darkness, with no idea of when the loss of power will subside. Valentine’s Day week 2021, Texans were told that ERCOT had not prepared for the deep cold that centered on Texas, and reserves for fueling power plants either were stuck in frozen pipes or just were not available. As a result, 151 people lost their lives due to exposure or other related effects of that storm.

This week, as we begin the first full week of June, we hear those same words, but this time we’re hearing them for the entire country. We all are asking how can we be here again and when will it happen? We’ll address these today in this article.

Let’s start with some perspective. On January 1, 2020, the futures price for Natural Gas was $2.1890 per MMBtu (million Btu). President Biden took office on January 20, 2021, and the price for Natural Gas was $2.5460 per MMBtu. On January 1, 2022, the futures price for Natural Gas was 3.7300 per MMBtu, and Tuesday’s closing price for Natural Gas was $9.293 per MMBtu.

Let’s look at a graph: Continue reading "Some Are Expecting "Rolling Brownouts" Or "Blackouts""

And You Thought Gasoline And Diesel Prices Were High

“The following is an excerpt from Tim Snyder’s “Weekly Quick Facts” newsletter. Tim is an accomplished economist with a deep understanding of applied economics in energy. We encourage you to visit Matador Economics and learn more about Tim. While there, you can sign up for his completely free Daily Energy Briefs and Weekly Quick Facts newsletters.”

I was asked last week, after our series on gasoline and diesel prices and how high those prices could go, my thoughts on the price of Natural Gas, and where they could go.

I have been following Natural Gas prices and Natural Gas inventories for years, so I went to my trusty charts and began to piece together a narrative.

Just this year alone, the price of Natural Gas has doubled. We started the year at $3.73 per million cubic feet (MMCF) and closed business yesterday, at $8.796 per MMCF. Here’s that
price chart:

Natural Gas Futures

I also looked at the inventory chart for Natural Gas from the Energy Information Agency. That chart showed me that natural gas inventories are starting to trend toward the lower end of the five-year average. Continue reading "And You Thought Gasoline And Diesel Prices Were High"

Records Everywhere And Not A Drop To Spare

“The following is an excerpt from Tim Snyder’s “Weekly Quick Facts” newsletter. Tim is an accomplished economist with a deep understanding of applied economics in energy. We encourage you to visit Matador Economics and learn more about Tim. While there, you can sign up for his completely free Daily Energy Briefs and Weekly Quick Facts newsletters.”

As we continue the gasoline discussion from last week, economists are fielding questions, from most of the conservative media, regarding just what needs to happen to change the trajectory of retail fuel prices in the U.S.

Last week, alone, I did 12 radio interviews and gave a lunch address to the Petroleum Engineers Club of Dallas. The subject for each one of those interviews was the same, "How high can prices go" and "How much longer with these record fuel prices hang on"?

To address these two questions, we must look at the remaining conditions, after the pandemic and the Biden administration. They are tight inventories for gasoline and diesel, drive season, and increased demand. I'm not even going to drift off into the fact that the Hurricane Season starts in 15 days.

We started the year at 232.8 million barrels, and As of 5-6-2022, gasoline inventories sat at 225 million barrels. As for the distillate inventories, they began the year at 126.8 million barrels and as of 5-6-2022 stood at 104 million barrels. Continue reading "Records Everywhere And Not A Drop To Spare"

U.S. Records Another Record For Retail Gasoline

“The following is an excerpt from Tim Snyder’s “Weekly Quick Facts” newsletter. Tim is an accomplished economist with a deep understanding of applied economics in energy. We encourage you to visit Matador Economics and learn more about Tim. While there, you can sign up for his completely free Daily Energy Briefs and Weekly Quick Facts newsletters.”

Last week’s jump in retail gasoline gives the US another dubious record, the highest average price ever recorded. Diesel is tracking back into record territory, as well. Families and businesses alike across the country feel the pain of these economy-killing prices continuing to spike. In interviews across the US, economists are being asked how much higher can these prices rise. The answer is always sobering.

Gasoline Prices

With no intention of changing the direction the Biden Administration is heading, some are speculating that we may see diesel over $8.00 per gallon and gasoline over $6.00 per gallon by Mid-Summer.

We must remember that this time of year represents planting season for our nation's farmers and graduation for so many of our young folks. It also represents the beginning of the “Drive Season” and a time when families travel for vacation. Continue reading "U.S. Records Another Record For Retail Gasoline"

What Do The Macros Tell Us About The Market?

“The following is an excerpt from Tim Snyder’s “Weekly Quick Facts” newsletter. Tim is an accomplished economist with a deep understanding of applied economics in energy. We encourage you to visit Matador Economics and learn more about Tim. While there, you can sign up for his completely free Daily Energy Briefs and Weekly Quick Facts newsletters.”

When the macros make the market in energy and stay way out ahead of the U.S. Fed!

This week’s attention has been almost entirely on the U.S. Federal Reserve and raising the Discount Rate by 50 basis points. The Fed’s charge is to bring inflation back in line with the goals of a stable market. The problem is this, when the actions of the FED are either too weak or too late, when they finally do act, it may be ill-timed at the very least, if not outright wrong.

Over the last few weeks, we have seen the GDP turn negative at -1.4%. We saw the Consumer Price Index come in at an 8.5% rate, year over year, and we got the Producer Price Index came in at a 40-year high of +11.2%.

These macros alone showed the markets just how far U.S. inflation had gotten out of control. No matter how much the Fed, or the Treasury Secretary, said the word “Transitory,” they just couldn’t fool markets back into line. It takes action. The macros tell us the FED action is “too little and too late.” Continue reading "What Do The Macros Tell Us About The Market?"