Petrol and Gas

I filled up the car yesterday for $2.19 a gallon. That’s not the typical price here in the Boston area, getting that price requires a detour over to the low price gas zone nearer the gasoline terminal. But it is weird. That’s less than we were paying Rita and Katrina laying waste to US oil and refinery capacity in the Gulf region; and that source of supply hasn’t come back on line.

Why is it so low? I think it’s because both the international regulators and the market over reacted and we are now bathing in petrol sent over by from Europe.

Heat is on at my house. Wholesale natural gas hasn’t rebounded like petrol has. It’s still going for about twice last years prices and some people think we might see a shortage this year. In New England a big slice of our electric power is produced from natural gas. The state has relaxed some environmental protection rules so some older oil based electric plants might be able take a bit of the pressure off the natural gas supply.

But the key fact I draw out of all this is that petrol is a lot more fungible in world markets compared to natural gas. And in the near term US is on it’s own when it comes to natural gas. LNG supply isn’t going to fill the gap – the supply isn’t there and the terminals to accept the supply are don’t exist.

Here’s a bizarre thought. What happens when people to realize that the cheapest most abundant source of fuel this winter is petrol? Most people have no idea how dangerous petrol is.

There are snow flakes outside my window at this very moment.

0 thoughts on “Petrol and Gas

  1. Ben Hyde

    Natural gas looks like it has stablized, just at a much higher price. So that’s the near term gap; but the peak oil gap – if your into that bleak narrative – is the actual gap that makes for an interesting gadankin experiment.

    Has petrol stopped ringing? I suspect not, but I’m uncertain.

    Meanwhile, the snow has melted and the sky is clear and blue.

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