Here’s Henry Hub, the US gas price:
The reason is oodles of fracked gas, so much it’s being thrown away in flaring. The price in some areas is close to negative:
This glut has met with weak demand in a mild winter. Thanks to John Kemp:
Because Henry Hub gas is relatively expensive once processed as LNG, and it sits between the Atlantic and Pacific, it is the effective global marginal price setter. This will be made even more significant by the recent trade deal as China buys more of it. The JKM Asian benchmark is already pricing below USD4Gj into mid-year.
European prices are also cratering on immense inventories:
So, global gas prices are now tumbling and are very likely to hit record lows in 2020. As a quick aside, thermal coal prices will almost certainly follow.
Everywhere except Australia, that is. We have more gas reserves per capita than anybody else yet, bizarrely, we’re paying higher prices than ever. While the US pays AUD2.75Gj for gas, Europe and Asia pay AUD5Gj (even though they have none), eastern Australians are still paying AUD10-12 for their gas.
Why? Because a gas cartel is being allowed to dictate price terms instead of being forced to compete with global prices. It is even worse than that. Via their government, Australians have a domestic reservation regime called the Australian Domestic Gas Security Mechanism that is supposed to guarantee local gas prices are benchmarked to a ‘net back’ price roughly AUD1.50 below the Asian price.
In short, the local price should be AUD3Gj and the only reason it isn’t is the Morrison Government is collaborating with the gas cartel on a massive theft of a national resource, even as it blathers on about doing nothing on climate change owing to the risk to energy prices.
Let’s not forget, either, that gas-fired power sets the marginal cost of electricity on the east coast. So, ALL businesses and households are paying massive rents to gas and power firms as a direct result of this energy theft. In a near recessionary economy. Go figure.
What kind of government supports this kind of income theft when its economy is already dying of income starvation? Where is the promised review of the ADGSM terms, I ask you?
Buried somewhere under the guff of Scotty from Marketing.
