The home heating oil industry has a long and proud history, and Fuel Oil News has been there supporting it since 1935. It is an industry that has faced many challenges during that time. In its 77th year, Fuel Oil News is doing more than just holding
Issue link: https://read.dmtmag.com/i/80916
EDI TO R' S NO T E More Perspective on Natural Gas Prices Keith Reid N ATURAL GAS PRICES ARE AT HISTORIC lows—no new news there for anyone in the industy. But as I've previously discussed in this column just as current astronomically high oil prices have to break at some point, so do these low natural gas prices. Fracking has opened up vast new fields of natural gas for exploitation. Prices are so low they are now below cost. New drill- ing is grinding to a halt. And just about anything related to combustion energy is looking hard at gas as an alternative fuel. A recent article in Business Insider by Wolf Richter—"Natural Gas Is Pushing Coal Over The Cliff"—highlights how current natural gas prices are doing more to kill off electricity production from coal than the most aggres- sive of Obama pushed regulation. As the article notes while current prices are extremely favorable compared to coal advances in electrical generation technol- ogy made gas more competitive at the prices found in the early 1990s. Where motor fuels are concerned, natural gas has become (subjectively) the hottest alternative fuel around. While a number of municipalities have had nat- ural gas vehicles in their fleets for some time, that trend is seen as expanding in coming years. Similarly, the tremendous price differential between natural gas and diesel has sparked interest among a range of commercial fleet operators in liquefied natural gas for Class 8 type vehicles and compressed natural gas for smaller trucks. There are some notable start-up and sup- port costs with the product, but the price 8 differential makes those costs acceptable now and likely in a future. And then there is oil. Fracking is not only bringing online new domestic natural gas reserves, but—to a lesser extent—oil as well. It is already having a regional impact. As the news article "EIA: Rise In Shale Oil Production Lowers Costs For Some Refiners; Price Variations Result" in this issue notes: Growth in U.S. production of "tight oil"—oil produced from shale and other low-permeability rock—is triggering regional price divergences in U.S. refin- ing, according to the Aug. 1 issue of This Week in Petroleum, published by the Energy Information Administration (EIA). Production of tight oil has increased through use of horizontal drilling and hydraulic fracturing, the same technologies used to expand natural gas production in several of the nation's shale formations. What does all this mean for oil heat? Natural gas will be widely used domestically in areas outside of residential and commercial heating, exported to foreign markets and pro- duction will be adjusted to keep prices viable for profitability. As the article states natural gas prices will "surge." Barring any serious Middle Eastern disruptions oil will have to come down and stabilize at some point. One would think. The oil market has been confus- ing folk far more sophisticated than I with its behavior in the past 10 years or so. Will the playing field return to the "relatively" level point it was before the mid 2000s? Perhaps not. But is should be far closer than today. Does that mean it's time to relax and wait for the good days to return? Absolutely not. SEPTEMBER 2012 | FUEL OIL NEWS | www.fueloilnews.com S e p t emb e r VOL . 7 7 NO. 0 9 EDITORIAL STAF F Editorial Office 1030 W. Higgins Road Suite 230 Park Ridge, IL 60068 847/720-5600 Editor Keith Reid 847/720-5615 kreid@m2media360.com Managing Editor Debra Reschke Schug 847/720-5618 dschug@m2media360.com Columnists Charles Bursey, Sr. John Griffin George Lanthier EXECUTIVE STAF F President/CEO and Group Publisher Marion Minor List Rentals/ Reprints – Cheryl Naughton 678/292-6054 Fax: 360/294-6054 cnaughton@m2media360.com PRODUCT ION Production Manager – Mary Jo Tomei Art Director – Andrew Stamm ADVERTISING SALES East – Dave Campbell, Associate Publisher 413/528-2364 Fax: 413/528-8835 dcampbell@m2media360.com Central & South – Rich Alden 603/899-3010 Fax: 603/899-2343 ralden@m2media360.com West – Ken Jordan 972/540-2122 Fax: 972/540-2127 kjordan@m2media360.com MAIN OF F ICE 1030 W. Higgins Road Suite 230 Park Ridge, IL 60068 847/720-5600 • Fax: 847-720-5601 CUSTOMER SERVICE 845/856-2229 • Fax: 845/856-5822 Fuel Oil News P.O. Box 4290, Port Jervis, NJ 12771 M2MEDIA360 Membership applied for 7/1/2010 BEV-AL COMMUNICATIONS INC. Marion Minor Gerald Winkel President/CEO Director of Finance Joanne Juda-Prainito Mary Jo Tomei VP Audience Develolpment Production Director