The surge in natural gas prices has even affected the US, as it becomes increasingly integrated into world markets. Benchmark Henry Hub has been trading as high as about US$5.50/mmBTU, its highest level since 2014. High LNG prices in Asia and Europe have meant that US exports have rebounded from their slump last summer, and US liquefaction plants are running at close to full capacity, taking about 11 billion cubic feet per day. 

US gas supply has not been responding to the higher prices, as producers put balance sheet repair and cash distributions to shareholders ahead of increased capital spending. Current production is still running about 4 bcf/d lower than the peak of 97 bcf/d in December 2019.

One factor that would be expected to temper US gas demand as prices reach current levels would have been a shift back to coal for power generation. But continued retirements of coal-fired plants, and an increased reliance on wind and solar power on the grid, have been changing that. The familiar relationship between coal and gas-fired generation, which would favour coal at Henry Hub prices above about $3.50 / mmBTU, has been breaking down. 

Prices could no longer be expected to be “lower for longer”, said Eugene Kim, Wood Mackenzie’s research director for Americas gas. “’Higher for longer’ may be on the cards… The upcoming winter stands in a perilous position.”

In brief 

President Biden said his administration would be “going after the bad actors and pandemic profiteers in our economy”, and cited fuel prices as an example. “There’s lots of evidence that gas prices should be going down, but they haven’t,” he said.

President Biden on Friday convened an online meeting of the Major Economies Forum, a group intended to foster international co-operation on climate change. The president was urging other countries “to do more to slash greenhouse gas emissions” ahead of the COP26 UN climate talks in November, the New York Times reported. The US and EU are backing an initiative to cut world methane emissions by 30% by the end of the decade, and hope to persuade other countries to sign up. 

Much of the president’s agenda for cutting US greenhouse gas emissions rests on legislation currently being negotiated over in Congress. The House Energy and Commerce committee put out a briefing note on the Democrats planned climate, infrastructure and healthcare legislation, known as the Build Back Better Act. The most important energy-related provision is the proposed US$150 billion Clean Electricity Performance Program, which would introduce a system of grants and taxes for electricity providers, creating an incentive for them to increase their supplies of low-carbon power by 4% each year. 

Opec sharply revised up its forecast of next year’s oil demand. It now expects demand to average 100.8 million barrels per day in 2022, an upward revision of nearly 1 million b/d from its previous estimate. The new forecast means oil consumption would hit a new record high next year, contradicting claims that the world might have reached “peak demand” for oil in 2019. 

And finally: another fictionalised treatment of the great genius of electrical engineering, Nikola Tesla. Stewart Copeland, best known as the drummer in The Police, has written an

opera about Tesla, ‘Electric Saint’, which was given its world premiere in Weimar, Germany, a couple of weeks ago. The opera focuses on the conflict between Tesla and Thomas Edison, described in the programme as “the Steve Jobs and Bill Gates of their time: one the brilliant marketer and businessman, the other a visionary and tech guy”. There are still a few performances left, starting on Saturday night and running into November. The trailer on YouTube is too short to give much of a sense of it, but it looks intriguing, anyway.

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