Cash market for liquid propane gas
The Governor's Energy Office GEO conducts a weekly survey of heating fuel prices during the heating season from the beginning of October to the end of March.
During the rest of the year, the GEO releases a bi-weekly update. The price for the various heating fuels are statewide averages, and prices in a given geographic region of the state may be considerably higher or lower than this average. Also, the statewide average price for propane, like heating oil, is a spot price, not a pre-buy price. The spot price for propane is based on a use of at least gallons a year. Households using propane just for cooking or hot water generally pay a higher per gallon price.
The table listed in our weekly price survey provides current Maine cash prices in dollars rounded to the nearest penny. The Energy Office has a calculator on its web site that allows consumers to obtain more detailed estimates of home heating costs, and the price impacts of various types of fuel, heating systems and heating appliances.
Heating costs vary considerably from home to home. The home heating calculator can assist cash market for liquid propane gas in finding the best heating option for their home, location, lifestyle, and budget. These fluctuations are due to several factors, global and domestic. In lateOPEC Organization of Petroleum Exporting Countries members agreed to production cuts, in order to reduce excess global inventories that were keeping prices low so low that some North American shale oil producers could not economically continue producing.
Duringprices began to rise as the global oil glut eased, and continued rising due to weather events, such as Gulf coast hurricanes that knocked out refinery production, and prolonged, severely cold weather across much of the eastern U.
With higher global prices, however, North American shale oil production has begun increasing again; U. In addition, Libyan oil production has surged, placing further pressure on OPEC's plan to limit an oversupplied global market https: Propane supplies and prices are the result of different factors, mostly domestic, cash market for liquid propane gas in the Northeast U. Because propane is a by-product of U.
This, in turn, has resulted in the export of significant volumes of propane, which has prevented domestic inventories from rising and putting downward pressure on prices. In cash market for liquid propane gas, in the Northeast, limited transportation options cash market for liquid propane gas pipeline into the Northeast; less reliable rail cash market for liquid propane gasas well as increased demand during the peak heating season, sometimes results in the need for an influx of more costly imported propane.
This is illustrated in the graph below. More expensive imports were used to quickly replenish the area's supply. Warmer temperatures over the last few weeks have contributed to inventories remaining well within the five year range. The following two tables compare the prices between various heating fuels, and converts these prices to a common heating unit value dollars per million Btu.
In January, when oil and natural prices were higher, wood pellets had a lower dollar cost on a heat value basis. This week, lower natural gas prices make this a lower cost fuel on a strictly heat value basis.
However, fuel prices are only part of the calculation when determining which fuel will save you more money over the course of a heating season. The type of heating system, as well as its efficiency, is also an cash market for liquid propane gas factor in determining final costs.
The Energy Office has a calculator on its web site that allows consumers to explore these fuel options further, as well as compare efficiencies of heating systems most closely matching their own system. The home heating calculator can assist homeowners in finding the best heating option for their home, location, lifestyle, and budget http: Efficiency Maine also has a calculator on its website that can help consumers evaluate their heating options http: The price for heating oil is a statewide average; prices in a given geographic region of the state may be considerably higher or lower than this average.
Also, the statewide average price for propane is based on consumption of at least gallons a year. The table above provides current Maine cash prices in dollars rounded to the nearest penny. Below is a table of prices collected for various regions of the state.
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Natural gas pricesas with other commodity prices, are mainly driven by supply and demand fundamentals. The current surge in unconventional oil and gas in the U. This has led to discussions in Asian oil-linked gas markets to import gas based on the Henry Hub index [4] until very recently the most widely used cash market for liquid propane gas for US natural gas prices. Depending on the marketplace, the price of natural gas is expressed in US dollars or other currency per 1 million British thermal units MMBtuthousand cubic feet Mcfor 1, cubic meters.
For rough comparisons, one million Btu is approximately equal to a thousand cubic feet of natural gas. Natural gas as it comes out of the ground is most often predominantly methane, but may have a wide range of BTU values, from much lower due to dilution by non-hydrocarbon gasses to much higher due to the presence of ethane, propane, and heavier compounds than standard pipeline-quality gas.
The natural gas market in the United States is split between the financial futures market, based on the NYMEX futures contract, and the physical market, the price paid for actual deliveries of natural gas and individual delivery points around the United States.
Market mechanisms in Europe and other parts of the world are similar, but not as well developed or complex as in the United States. Monthly contracts expire 3—5 days in advance of the first day of the delivery month, at which points traders may either settle their positions financially with other traders in the market if they have not done so already or choose to "go physical" and accept delivery of physical natural gas which is actually quite rare in the financial market.
It should be noted that most financial transactions for natural gas actually take place off exchange in the over-the-counter "OTC" markets using "look alike" contracts that match the general cash market for liquid propane gas and characteristics of the NYMEX futures contract and settle against the final NYMEX contract value, but that are cash market for liquid propane gas subject to the regulations and market rules required on the actual exchange.
It is also important to note that nearly all participants in the financial gas market, whether on or off exchange, participate solely as a financial exercise in order to profit from the net cash flows that occur when financial contracts are settled among counterparties at the expiration of a trading contract. This practice allows for the hedging of financial exposure to transactions in the physical market by allowing physical suppliers and users of natural gas to net their gains in the financial market against the cost of their physical transactions that will occur later on.
It also allows individuals and organizations with no need or exposure to large quantities of physical natural gas to participate in the natural gas market for the sole purpose of gaining from trading activities.
Generally speaking, physical prices at the beginning of any calendar month at any particular delivery location are based on the final settled forward financial price for a given delivery period, plus the settled "basis" value for that location see below. Once a forward contract period has expired, gas is then traded daily in a "day ahead market" wherein prices for any particular day or occasional day period when weekends and holidays are involved are determined on the preceding day by traders using localized supply and demand conditions, in particular weather forecasts, at a particular delivery location.
The average of all of the individual daily markets in a given month is then referred to as the "index" price for that month at that particular location, and it is not uncommon for the index price for a particular month to vary greatly from the settled futures price plus basis from a month earlier. Many market participants, especially those transacting in gas at the wellhead stage, then add or subtract a small amount to the nearest physical market price to arrive at their ultimate final transaction price.
Once a particular day's gas obligations are finalized in the day-ahead market, traders or more commonly lower-level personnel in the organization known as, "schedulers" will work together with counterparties and pipeline representatives to "schedule" the flows of gas into "injections" and out of "withdrawals" individual pipelines and meters.
Because, in general, injections must equal withdrawals i. Because market conditions vary between Henry Hub and the roughly 40 or so physical trading locations around Cash market for liquid propane gas States, financial traders also usually transact simultaneously in financial "basis" contracts intended to approximate these difference in geography and local market conditions.
The rules around these contracts - and the conditions under which they are traded - are nearly identical to those for the underlying gas futures contract. For instance, options and other derivative transactions are very common, especially in the OTC market, as are "swap" transactions where participants exchange rights to future cash flows based on underlying index prices or delivery obligations or time periods.
Participants use these tools to further hedge their financial exposure to the underlying price of natural gas. The demand for natural gas is mainly driven by the following factors:. Weather conditions can significantly affect natural gas demand and supply. Cold temperatures in the winter increase the demand for space heating with natural gas in commercial and residential buildings.
Natural gas demand usually peaks during the coldest months of the year December—February and is lowest during the "shoulder" months May—June and September—October. During the warmest summer months July—Augustdemand increases again. Due to the shift in population in the United States toward the sun belt, summer demand for natural gas is rising cash market for liquid propane gas than winter demand.
Temperature effects are measured in terms of 'heating degree days' HDD during the winter, and 'cooling degree days' CDD during the summer. HDDs are calculated by subtracting the average temperature for a day from 65 degrees.
Thus, if the cash market for liquid propane gas temperature for a day is 50 degrees, cash market for liquid propane gas are 15 HDDs. If the average temperature is above 65 degrees, HDD is zero. Cooling degree days are also measured by the difference cash market for liquid propane gas the average temperature and 65 degrees. Thus, if the average temperature is 80 degrees, there are 15 CDDs. If the average temperature is below 65 degrees, CDD is zero. Hurricanes can affect both the supply of and demand for natural gas.
For example, as hurricanes approach the Gulf of Mexico, offshore natural gas platforms are shut down as workers evacuate, thereby shutting in production. In addition, hurricanes can also cause severe destruction to offshore and onshore production facilities. For example, Hurricane Katrina resulted in massive shut-ins cash market for liquid propane gas natural gas production.
Hurricane damage can also reduce natural gas demand. The destruction of power lines interrupting electricity produced by natural gas can result in significant reduction in demand for a given area e. Changing demographics also affects the demand for natural gas, especially for core residential customers. In the US for instance, recent demographic trends indicate an increased population movement to the Southern and Western states. These areas are generally characterized by warmer weather, thus we could expect a decrease in demand for heating in the winter, but an increase in demand for cooling in the summer.
As electricity currently supplies most of the cooling energy requirements, and natural gas supplies most of the energy used for heating, population movement may decrease the demand for natural gas for these customers. However, as more power plants are fueled by natural gas, natural gas demand could in fact increase.
The state of the economy can have a considerable effect on the demand for natural gas in the short term. This is particularly true cash market for liquid propane gas industrial and to a lesser extent the commercial customers. When the economy is booming, output from the industrial sectors generally increases. On the other hand, when the economy is experiencing a recession, output from industrial sectors drops.
These cash market for liquid propane gas in industrial output accompanying the economy affects the amount of natural gas needed by these industrial users. For instance, during the economic recession ofU. Supply and demand dynamics in the marketplace determine the short term price for natural gas.
However, this can work in reverse as well. The price of natural gas can, for certain consumers, affect its demand. This is particularly true for those consumers who have the ability to switch the fuel which they consume. In general the core customers residential and commercial do not have this ability, however, a number of industrial and electric generation consumers have the capacity to switch between fuels.
For instance, when natural gas prices are extremely high, electric generators may switch from using natural gas to using cheaper coal or fuel oil. This fuel switching then leads to a decrease for the demand of natural gas, which usually tends to drop its price. North American natural gas injections positive represent additional demand and compete with alternative uses such as gas for heating or for cash market for liquid propane gas generation. When the storage levels are low, a signal is being sent to the market indicating that there is a smaller supply cushion and prices will be rising.
On the other hand, when storage levels are high, this sends a signal cash market for liquid propane gas the market that there is greater supply flexibility and prices will tend to drop. Exports are another source of demand. In North America, gas is exported within its forming countries, Canada, the US and Mexico as well as abroad to countries such as Japan. The ability to transport natural gas from the well heads of the producing regions to the consuming regions affects the availability of supply in the marketplace.
The interstate and intrastate pipeline infrastructure has limited capacity and can only transport so much natural gas at any one time.
This has the effect of limiting the maximum amount of natural gas that can reach the market. As natural gas injections positive represent additional demand, withdrawals negative represent an additional source of supply which can be accessed quickly. The more cash market for liquid propane gas banks like shale deposits used give more cushion for the natural gas markets. The amount of natural gas produced both from associated and non-associated sources can be controlled to some extent by the producers.
The drilling rates and gas prices form a feedback loop. When supply is low relative to demand, prices rise; this gives a market signal to the producer to increase the number of rigs drilling for natural gas. The increased supply will then lead to a decrease in the price. Natural phenomena can significantly affect natural gas production and thus supply. Hurricanes, for example, can affect the offshore production and exploitation of natural gas.
This is because safety requirements may mandate the temporary shut down of offshore production platforms. Tornadoes can have a similar effect on onshore production facilities. Equipment malfunction, although not frequent, could temporarily disrupt the flow across a given pipeline at an important market center. This would ultimately decrease the supply available in that market.
On the other hand, technical developments in engineering methods can lead to more abundant supply. Imports are a source of supply. The chart shows a year history of annual United States natural gas production and average wellhead prices from through Prices paid by consumers were increased above those levels by processing and distribution costs.
Production is shown in billions of cubic meters per year, and average wellhead pricing is shown in United States cash market for liquid propane gas per thousand cubic meters, adjusted to spring,by the U. Through the s the U. Gas flares were common sights in oilfields and at refineries. Beginning inthe Federal Power Commission regulated the price of US natural gas transported across state lines. The commission set the price of gas below the market rate, resulting in price distortions.
The low prices encouraged consumption and discouraged production. By the s, there were shortages of price-regulated interstate gas, while unregulated gas within the gas-producing states intrastate gas was plentiful, but more expensive. Bynearly half the marketed gas in the US was sold to the intrastate market, resulting in shortages during and in the Midwest that caused factories and schools to close cash market for liquid propane gas for lack of natural gas. The federal government progressively deregulated the price of natural gas starting inand ending with complete federal price deregulation in While supply interruptions [ citation needed ] have caused repeated spikes in pricing since cash market for liquid propane gas, longer range price trends respond to limitations in resources and their rates of development.
As of the U. Interior Department estimated that the Outer Continental Shelf of the United States held more than 15 trillion cubic meters of recoverable natural gasequivalent to about 25 cash market for liquid propane gas of domestic consumption at present rates. Hydraulic fracturing has reduced the Henry Hub spot price of natural gas considerably since The increased shale gas production leads to a shift of supply away from the south to the northeast and midwest of the country.
Prices of natural gas for end-consumers vary greatly throughout Europe.