Fuel Oil News

Fuel Oil News June 2013

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JUNE VOL.78 NO.06 Editor's Note EDITORIAL STAFF Editorial Office 1030 W. Higgins Road Suite 230 Park Ridge, IL 60068 847/720-5600 Editor Keith Reid 847/720-5615 kreid@specialtyim.com It's a gas Keith Reid D id you hear about the day Britain nearly ran out of natural gas? It wasn't that long ago. As Steve Robson of the U.K.'s Daily Mail Online reported (among others) on May 24, in March the country came within six hours of having the burners go out along with the lights, at least in some areas. It was the clichéd "perfect storm" of bitterly cold weather and pipeline failures and ships too far from port and storage capacity shortfalls. What does that mean here in the United States, specifically for oil? Well, it's unlikely we'll face the same utility gas crisis given our current domestic supply capabilities. At the same time, the reality of the UK crisis is instructive for the marketing of our domestic natural gas production and likely natural gas prices. It is certainly no secret in industries that market competitive fuels that the heavily expanded reserves made possible through fracking technology have generated a glut in domestic gas supply. Prices plummeted to the point of not being worth continuing production in many cases because there was too much supply for the available demand. But, the U.S. glut, while not unique, is not that common either internationally. That turns us, according to many analysts and if the reserves perform as expected, into a Saudi Arabia of the natural gas 8 world. And that means that natural gas is not going to stay within our borders. Natural gas is currently exported by pipeline to supply Canada and Mexico, however, in mid-May approval was granted to expand exports to countries not in the NAFTA umbrella. That will impact price upward, though more production will certainly be bought back online as well as the prices make it worthwhile. Similarly, natural gas will continue to displace coal domestically in energy generation, driven both from a price standpoint and the slice of the environmental movement that sees natural gas as an acceptable fossil fuel relative to coal and impractical "zero emission" solutions like wind power. That demand should move prices upward. Some degree of diesel will increasingly be displaced by natural gas in the transportation sector. The primary fleets will be those that rest their trucks for the evening, which allows for less expensive infrastructure and electricity costs using a slower fill approach. But, that should still have a notable impact in lowering prices. So, you can expect natural gas prices to go up, but likely not to excessive levels given the flexibility in production and extent of the reserves. Good news for a fuel oil dealer or marketer. The real question is when will oil prices drop? JUNE 2013 | FUEL OIL NEWS | www.fueloilnews.com Managing Editor Debra Reschke Schug 847/720-5618 dschug@specialtyim.com Columnists Charles Bursey, Sr. Shane Sweet George Lanthier List Rentals/ Reprints – Cheryl Naughton 678/292-6054 Fax: 360/294-6054 cnaughton@specialtyim.com PRODUCTION Production Director – Mary Jo Tomei Art Director – Brian Snook A d v ertisin g S ales East – Dave Campbell, Associate Publisher 413/528-2364 Fax: 413/528-8835 dcampbell@specialtyim.com Central & South Rich Alden 603/899-3010 Fax: 603/899-2343 ralden@specialtyim.com Barbara Reynolds 603/588-2086 breynolds@specialtyim.com West – Ken Jordan 972/540-2122 Fax: 972/540-2127 kjordan@specialtyim.com MAIN OFFICE 1030 W. Higgins Road Suite 230 Park Ridge, IL 60068 847/720-5600 • Fax: 847-720-5601 C ustomer S er v ice 845/856-2229 • Fax: 845/856-5822 Fuel Oil News P.O. Box 4290, Port Jervis, NJ 12771 Membership applied for 7/1/2010

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