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Natural gas won’t stay cheap. It was cheap here in Australia 10 years ago and now it’s so expensive no one can afford to run gas heating and it’s only going up.

Natural gas won’t stay cheap. It was cheap here in Australia 10 years ago and now it’s so expensive no one can afford to run gas heating and it’s only going up. Now (thankfully) the government has banned the installation of new gas heating and a lot of people are getting rid of gas cooking, hot water heating etc… it’s for the best.

maxglute 3y ago
I remember a recent investor report posted on HN about declining health of permian basin, and the economics of extraction will increasingly not make sense in 10 years. Seems like no brainer if shale and by connection LNG is on way out. Might also explain Biden stalling LNG expansions especially with NATO on the hook, maybe it's cynical electioneering to his base, but maybe the future of cheap US LNG is not bright vs renewables.
- jhallenworld 3y ago
  The fossil fuel capitalists are so very unhappy about this ban, they are still going on about it in the financial news. I have to say, I love it. Low natural gas prices directly benefit me, and isn't it our gas? The price has certainly come down (look at henry hub chart..), but also winter has not been too cold.. They should ban oil exports next.. (for "national security") Actually export tariffs would be better than outright bans.
  - dripton 3y ago
    Export tariffs are actually unconstitutional in the US. https://en.wikipedia.org/wiki/Import-Export_Clause https://en.wikipedia.org/wiki/Import-Export_Clause
    - jhallenworld 3y ago
      Interesting.. the same section banned any limitation on the importation of slaves... at least that clause had a sunset date. Both clauses were basically: "don't touch our cash cow".
      - engineer_22 3y ago
        The price of consensus
    - erikpt-work 3y ago
      Looking at that clause, it appears that it's only unconstitutional if the individual states do it. Doesn't say anything about the federal government or Congress. Or am I reading it wrong?
      - dripton 3y ago
        There are two clauses that ban export tariffs. One applies to states, the other to the Feds.
  - engineer_22 3y ago
    Very warm winter. People in my (usually Frosty) neighborhood are marvelling. It's remarkably warm this year.
- engineer_22 3y ago
  Vaclav Smil's books about energy give some extra context. I have read his Power Density book (eye opening comparison of solar, wind, nuclear, fossil). IIRC Gas extraction has an extremely high EROI (30x) initially, making it a highly productive extractive resource. But each gas well has a productive lifespan of approx 7 years requiring constant activity to sustain development.
  - surfaceofthesun 3y ago
    Huge fan of Valclav Smil’s work. Note that the significant amount of water required to frack those wells is in the order of 1 million galls or more. Both sides of that is impacting the Edwards Aquifer[1]. Wastewater from wells is finally being treated, but it doesn’t seem to be a widespread practice, yet. It’s also possible that production declines after each subsequent refracking process. —- 1 - https://en.m.wikipedia.org/wiki/Edwards_Aquifer https://en.m.wikipedia.org/wiki/Edwards_Aquifer
Aloha 3y ago
It was cheap 10 years ago because the global price of gas was cheap, its not now.
- thoughtstheseus 3y ago
  No such thing as a global gas price. Natural gas pricing is regional as it cannot be easily transported.
  - Aloha 3y ago
    Australia exports 41% of its gas.
  - sundaeofshock 3y ago
    US exported 6.9 trillion cubic feet of natural gas in 2022. https://www.eia.gov/energyexplained/natural-gas/imports-and-exports.php https://www.eia.gov/energyexplained/natural-gas/imports-and-...
    - Retric 3y ago
      Yea at rather insane prices due to the Ukraine war. In 2022 the US imported 3 trillion CF, exported 6.9 trillion cubic feet, and extracted 43.8 trillion CF. By comparison in 2015 we only exported 1.8 trillion CF.
      - beeboobaa 3y ago
        Also known as "the price" for anyone who doesn't sit on massive gas deposits
    - nroets 3y ago
      The article says nothing about the cost of shipping gas across the globe. It only says 44% of exports are by pipeline. If shipping makes it an order of magnitude more expensive, then there is no global price.
jbarham 3y ago
The only reason that natural gas prices in Australia have gone up in the past 10 years is that gas producers in the eastern states were able to start exporting gas as LNG. As of 2023, Australia is the world's second largest LNG exporter (source: https://www.statista.com/statistics/1262074/global-lng-export-capacity-by-country/ https://www.statista.com/statistics/1262074/global-lng-expor...) after the US (take that Russia!) and ahead of Qatar. Great for the gas exporting cartel but not so great for ordinary Australians in eastern states who now pay the same for gas as people in Tokyo. (And Aussies wonder why manufacturers keep leaving...) Banning domestic gas usage for new homes (which the fools running Victoria, the state I live in, have done) will do nothing for emissions but will mean that the gas cartel can make even more money exporting LNG to Asia. Bravo! The exception is Western Australia which is also a massive LNG exporter but has stricter domestic reservation requirements than the eastern states. All of the above has been extensively documented at https://www.macrobusiness.com.au/ https://www.macrobusiness.com.au/ (source: https://www.google.com.au/search?q=site%3Ahttps%3A%2F%2Fwww.macrobusiness.com.au%2F+gas+cartel https://www.google.com.au/search?q=site%3Ahttps%3A%2F%2Fwww....).
- paranoidrobot 3y ago
  > will do nothing for emissions How can that be? Direct consumption emissions are eliminated. Those with solar (a growing percentage) reduce their indirect emissions from grid non-renewable generators. And there is a growing percentage of green generation on the grid.
  - jbarham 3y ago
    >> will do nothing for emissions > How can that be? Because a reduction of domestic gas usage will just be diverted to less efficient LNG exports. Given that by far the largest source of Victoria's electricity generation capacity is from dirty brown coal [1] if anything banning domestic gas usage might even make emissions worse since it will force people to use only electricity for cooking and heating. > Direct consumption emissions are eliminated. Ah, so burning Aussie natural gas in Asia (after it's been liquified and then turned back into gas) is somehow better for the environment than just burning it in Australia? 1: https://en.wikipedia.org/wiki/Energy_in_Victoria#Electricity_generation https://en.wikipedia.org/wiki/Energy_in_Victoria#Electricity...
rmm 3y ago
It will stay cheap in most of Australia and United States. Rest of world (europe) though….
letitbeirie 3y ago
Depends where you are. In the US natural gas is a byproduct of shale oil extraction and we have a limited capacity to move or export it so it's almost priced as a waste product. It's unlikely that electricity will be any cheaper than gas soon either, since that's where 40% (and growing, as our coal and nuclear fleet are retired) of our electricity comes from.
- pfdietz 3y ago
  Most US natural gas production is from "dry" wells without petroleum production.
- xbmcuser 3y ago
  Today solar electricity is already cheaper than natural gas and by 2030-31 solar and wind electricity cost will be 1/4 to 1/8 of today's prices looking at the avg 10% cost decline we are seeing. The advantage of natural gas being cheaper than solar was 4-5 years ago now it's no longer the case. Natural gas advantage now is of having being able to produce electricity when needed but as battery storage prices drop it will also be priced out from that market in many places with solar and wind availablity.
  - letitbeirie 3y ago
    > solar electricity is already cheaper than natural gas Does that include transmission? Most population centers already have the pipeline network needed to bring them gas but the getting power from giant solar projects in the desert (where it's sunny) to the eastern interconnection (where most people live) is still an unmet need. > as battery storage prices drop Eventually, but at present our grid-scale storage has a capacity of ~30GW on a grid of ~1200GW; it's going to take something like a trillion dollars and a generation to build out grid-scale storage to the point where we can even support a 100% renewable grid. We'll get there eventually but until grid-scale storage is installed and ready, the gas plants (with their fast start/stop ability) are what's enabling the renewables to come online and replace our older coal and nuke plants. We're probably going to have to lean even more on gas since the first ~500GW of renewables are replacing existing coal/nuclear we're losing, but once the grid storage tech catches up we can start installing that in lieu of new gas plants and replacing the ones we've already built. Tl;dr: we'll get there but not in the lifetime of a furnace
fransje26 3y ago
> Now (thankfully) the government has banned the installation of new gas heating I'm sorry, but how does that make any sense, when 47% of the electricity production in Australia comes from coal?? They are banning a system that is actually pretty efficient at making heat, to instead use a low efficiency coal power plant, to produce electricity, to then use in heat pumps to produce heat. Simply, wow. https://www.energy.gov.au/energy-data/australian-energy-statistics/data-charts/australian-electricity-generation-fuel-mix https://www.energy.gov.au/energy-data/australian-energy-stat...

maxglute 3y ago

I remember a recent investor report posted on HN about declining health of permian basin, and the economics of extraction will increasingly not make sense in 10 years. Seems like no brainer if shale and by connection LNG is on way out. Might also explain Biden stalling LNG expansions especially with NATO on the hook, maybe it's cynical electioneering to his base, but maybe the future of cheap US LNG is not bright vs renewables.

jhallenworld 3y ago
The fossil fuel capitalists are so very unhappy about this ban, they are still going on about it in the financial news. I have to say, I love it. Low natural gas prices directly benefit me, and isn't it our gas? The price has certainly come down (look at henry hub chart..), but also winter has not been too cold.. They should ban oil exports next.. (for "national security") Actually export tariffs would be better than outright bans.
- dripton 3y ago
  Export tariffs are actually unconstitutional in the US. https://en.wikipedia.org/wiki/Import-Export_Clause https://en.wikipedia.org/wiki/Import-Export_Clause
  - jhallenworld 3y ago
    Interesting.. the same section banned any limitation on the importation of slaves... at least that clause had a sunset date. Both clauses were basically: "don't touch our cash cow".
    - engineer_22 3y ago
      The price of consensus
  - erikpt-work 3y ago
    Looking at that clause, it appears that it's only unconstitutional if the individual states do it. Doesn't say anything about the federal government or Congress. Or am I reading it wrong?
    - dripton 3y ago
      There are two clauses that ban export tariffs. One applies to states, the other to the Feds.
- engineer_22 3y ago
  Very warm winter. People in my (usually Frosty) neighborhood are marvelling. It's remarkably warm this year.
engineer_22 3y ago
Vaclav Smil's books about energy give some extra context. I have read his Power Density book (eye opening comparison of solar, wind, nuclear, fossil). IIRC Gas extraction has an extremely high EROI (30x) initially, making it a highly productive extractive resource. But each gas well has a productive lifespan of approx 7 years requiring constant activity to sustain development.
- surfaceofthesun 3y ago
  Huge fan of Valclav Smil’s work. Note that the significant amount of water required to frack those wells is in the order of 1 million galls or more. Both sides of that is impacting the Edwards Aquifer[1]. Wastewater from wells is finally being treated, but it doesn’t seem to be a widespread practice, yet. It’s also possible that production declines after each subsequent refracking process. —- 1 - https://en.m.wikipedia.org/wiki/Edwards_Aquifer https://en.m.wikipedia.org/wiki/Edwards_Aquifer

Aloha 3y ago

It was cheap 10 years ago because the global price of gas was cheap, its not now.

thoughtstheseus 3y ago
No such thing as a global gas price. Natural gas pricing is regional as it cannot be easily transported.
- Aloha 3y ago
  Australia exports 41% of its gas.
- sundaeofshock 3y ago
  US exported 6.9 trillion cubic feet of natural gas in 2022. https://www.eia.gov/energyexplained/natural-gas/imports-and-exports.php https://www.eia.gov/energyexplained/natural-gas/imports-and-...
  - Retric 3y ago
    Yea at rather insane prices due to the Ukraine war. In 2022 the US imported 3 trillion CF, exported 6.9 trillion cubic feet, and extracted 43.8 trillion CF. By comparison in 2015 we only exported 1.8 trillion CF.
    - beeboobaa 3y ago
      Also known as "the price" for anyone who doesn't sit on massive gas deposits
  - nroets 3y ago
    The article says nothing about the cost of shipping gas across the globe. It only says 44% of exports are by pipeline. If shipping makes it an order of magnitude more expensive, then there is no global price.

jbarham 3y ago

The only reason that natural gas prices in Australia have gone up in the past 10 years is that gas producers in the eastern states were able to start exporting gas as LNG. As of 2023, Australia is the world's second largest LNG exporter (source: https://www.statista.com/statistics/1262074/global-lng-export-capacity-by-country/ https://www.statista.com/statistics/1262074/global-lng-expor...) after the US (take that Russia!) and ahead of Qatar. Great for the gas exporting cartel but not so great for ordinary Australians in eastern states who now pay the same for gas as people in Tokyo. (And Aussies wonder why manufacturers keep leaving...) Banning domestic gas usage for new homes (which the fools running Victoria, the state I live in, have done) will do nothing for emissions but will mean that the gas cartel can make even more money exporting LNG to Asia. Bravo! The exception is Western Australia which is also a massive LNG exporter but has stricter domestic reservation requirements than the eastern states. All of the above has been extensively documented at https://www.macrobusiness.com.au/ https://www.macrobusiness.com.au/ (source: https://www.google.com.au/search?q=site%3Ahttps%3A%2F%2Fwww.macrobusiness.com.au%2F+gas+cartel https://www.google.com.au/search?q=site%3Ahttps%3A%2F%2Fwww....).

paranoidrobot 3y ago
> will do nothing for emissions How can that be? Direct consumption emissions are eliminated. Those with solar (a growing percentage) reduce their indirect emissions from grid non-renewable generators. And there is a growing percentage of green generation on the grid.
- jbarham 3y ago
  >> will do nothing for emissions > How can that be? Because a reduction of domestic gas usage will just be diverted to less efficient LNG exports. Given that by far the largest source of Victoria's electricity generation capacity is from dirty brown coal [1] if anything banning domestic gas usage might even make emissions worse since it will force people to use only electricity for cooking and heating. > Direct consumption emissions are eliminated. Ah, so burning Aussie natural gas in Asia (after it's been liquified and then turned back into gas) is somehow better for the environment than just burning it in Australia? 1: https://en.wikipedia.org/wiki/Energy_in_Victoria#Electricity_generation https://en.wikipedia.org/wiki/Energy_in_Victoria#Electricity...

rmm 3y ago

It will stay cheap in most of Australia and United States. Rest of world (europe) though….

letitbeirie 3y ago

Depends where you are. In the US natural gas is a byproduct of shale oil extraction and we have a limited capacity to move or export it so it's almost priced as a waste product. It's unlikely that electricity will be any cheaper than gas soon either, since that's where 40% (and growing, as our coal and nuclear fleet are retired) of our electricity comes from.

pfdietz 3y ago
Most US natural gas production is from "dry" wells without petroleum production.
xbmcuser 3y ago
Today solar electricity is already cheaper than natural gas and by 2030-31 solar and wind electricity cost will be 1/4 to 1/8 of today's prices looking at the avg 10% cost decline we are seeing. The advantage of natural gas being cheaper than solar was 4-5 years ago now it's no longer the case. Natural gas advantage now is of having being able to produce electricity when needed but as battery storage prices drop it will also be priced out from that market in many places with solar and wind availablity.
- letitbeirie 3y ago
  > solar electricity is already cheaper than natural gas Does that include transmission? Most population centers already have the pipeline network needed to bring them gas but the getting power from giant solar projects in the desert (where it's sunny) to the eastern interconnection (where most people live) is still an unmet need. > as battery storage prices drop Eventually, but at present our grid-scale storage has a capacity of ~30GW on a grid of ~1200GW; it's going to take something like a trillion dollars and a generation to build out grid-scale storage to the point where we can even support a 100% renewable grid. We'll get there eventually but until grid-scale storage is installed and ready, the gas plants (with their fast start/stop ability) are what's enabling the renewables to come online and replace our older coal and nuke plants. We're probably going to have to lean even more on gas since the first ~500GW of renewables are replacing existing coal/nuclear we're losing, but once the grid storage tech catches up we can start installing that in lieu of new gas plants and replacing the ones we've already built. Tl;dr: we'll get there but not in the lifetime of a furnace

fransje26 3y ago

> Now (thankfully) the government has banned the installation of new gas heating I'm sorry, but how does that make any sense, when 47% of the electricity production in Australia comes from coal?? They are banning a system that is actually pretty efficient at making heat, to instead use a low efficiency coal power plant, to produce electricity, to then use in heat pumps to produce heat. Simply, wow. https://www.energy.gov.au/energy-data/australian-energy-statistics/data-charts/australian-electricity-generation-fuel-mix https://www.energy.gov.au/energy-data/australian-energy-stat...