Natural Gas Plunge

[errolanderson]

Buyers stepped in at the 50 DMA.

Now we wait.

[ATTACH]8950[/ATTACH]

Putin has a very big say . . . .

[furrowtickler]

Putin has a very big say . . . .

Putin is the new whipping boy that Trump is out .... for now . But respect in one way , he froze some input costs for Russian farmers including fertilizer. He knows what drives an economy.... Ag and oil ... most have no clue in the western world. Taxes and over regulation swamp economies , government jobs create zero economic growth , its recirculating money that creates zero wealth

[furrowtickler]

This does not pay bills ...




That destroys economies

[macdon02]

A RECAP AND SECOND ORDER
CONSEQUENCES
We spent months harping on about the “shale revolution” (no doubt boring you to tears),
and what we said was this...
The shale revolution came about largely as a result of the pointy shoes at the Fed cocking
up interest rates lowering the cost of capital, which meant that finding yield was tougher
than finding an honest politician... and so investors went further down the risk curve.
Criminals Goldman Sachs and assorted other salesmen packaged up shale into debt
instruments, ignoring or obfuscating the fact that production rates on shale decline faster
than sleepy Joe’s approval ratings, and yet the bonds were structured as if they were
financing Gawar (Saudi Arabia’s massive field), which they most certainly were not.

Now, what all of this meant — apart from a boom in both production of oil and a lot of
bagholders (we’ve not sympathy for them they should have been reading our damn
publication or done their homework) — was that the byproduct of shale was a deluge of
free natural gas. In fact, much of it was flared off… there was just so much excess. In such an
environment it’s pretty darn tough for natural gas producers to compete with free. And
since they couldn't, they didn’t. Most handed out pink slips and the entrepreneurial ones
went on to become marijuana growers on the Canadian pink sheets and the less
entrepreneurial just consumers of the product. Who knows? What we know is they went
away.
To put this into some context of numbers. This got us to natural gas at $1.50. Now, let me
ask you a question. Take away shale and what is the true clearing price for natural gas? $5?
$10?$15?
Does it have to be 100% balance sheet financed? Probably, but truthfully I have NO idea,
which is terrifying. And you know what?I’ve asked around and nobody really knows. Yikes!
You know what I think happens?I think natural gas clears at $20+ over the next few years.
Sounds loopy, doesn’t it? Ah, that crazy Chris. Watch!
What could push it down? Well, I guess subsidies into the natural gas space, but can you see
sleepy Joe and that witch Harris stepping onto a podium and announcing a subsidy for
fossil fuels? No, these people are professional arsonists, not firefighters.
Anyway, back to second order consequences. It’s easy to get off track here. Whew!
So higher natural gas. Got it? Cool. Well, natural gas is the stuff we need to produce
ammonia, and when it comes to producing those tasty meals we enjoy every day, it is fossil
fuels used to mine for phosphate. Together then we have ammonia and phosphate, which
we need to make fertilizer. And fert is the stuff that we need to grow food at scale. Of
course, we’ve not even begun to discuss the destroyed supply chain, labour shortages,
higher costs of, well… everything. No, we are barreling at speed towards a true catastrophe
where we have skinny people with flies on their faces staring at an empty bowl of porridge.
We WILL be seeing widespread starvation. I’m not kidding. I wish I was.
What else? You need food to keep the peace. And since we’ll be short food, we’ll be long
anger.

Oh, one other thing. You remember how I promised you we’d see resource nationalism?
Well, our Chinese friends just halted phosphate exports. That’s something like 30% of
global export volumes.
“Fertilizer prices have increased dramatically in recent years, and the news coming from
China will more than likely help thistrend continue,”said Theresa Sisung, field crops
specialist for the Michigan Farm Bureau. “Farmersshould talk to their retailerssooner
rather than later to discusstheir optionsfor purchasing fertilizer for their 2022 crop
needs.”
Prepare for a world of less. Less of everything. What can we do?
Well, I look forward to finally losing that last bit of belly fat that stops me from having a
truly cut six pack and well holding onto what we bought for this very purpose. Fertilizer
stocks

[AlbertaFarmer5]

A RECAP AND SECOND ORDER
CONSEQUENCES
We spent months harping on about the “shale revolution” (no doubt boring you to tears),
and what we said was this...
The shale revolution came about largely as a result of the pointy shoes at the Fed cocking
up interest rates lowering the cost of capital, which meant that finding yield was tougher
than finding an honest politician... and so investors went further down the risk curve.
Criminals Goldman Sachs and assorted other salesmen packaged up shale into debt
instruments, ignoring or obfuscating the fact that production rates on shale decline faster
than sleepy Joe’s approval ratings, and yet the bonds were structured as if they were
financing Gawar (Saudi Arabia’s massive field), which they most certainly were not.

Now, what all of this meant — apart from a boom in both production of oil and a lot of
bagholders (we’ve not sympathy for them they should have been reading our damn
publication or done their homework) — was that the byproduct of shale was a deluge of
free natural gas. In fact, much of it was flared off… there was just so much excess. In such an
environment it’s pretty darn tough for natural gas producers to compete with free. And
since they couldn't, they didn’t. Most handed out pink slips and the entrepreneurial ones
went on to become marijuana growers on the Canadian pink sheets and the less
entrepreneurial just consumers of the product. Who knows? What we know is they went
away.
To put this into some context of numbers. This got us to natural gas at $1.50. Now, let me
ask you a question. Take away shale and what is the true clearing price for natural gas? $5?
$10?$15?
Does it have to be 100% balance sheet financed? Probably, but truthfully I have NO idea,
which is terrifying. And you know what?I’ve asked around and nobody really knows. Yikes!
You know what I think happens?I think natural gas clears at $20+ over the next few years.
Sounds loopy, doesn’t it? Ah, that crazy Chris. Watch!
What could push it down? Well, I guess subsidies into the natural gas space, but can you see
sleepy Joe and that witch Harris stepping onto a podium and announcing a subsidy for
fossil fuels? No, these people are professional arsonists, not firefighters.
Anyway, back to second order consequences. It’s easy to get off track here. Whew!
So higher natural gas. Got it? Cool. Well, natural gas is the stuff we need to produce
ammonia, and when it comes to producing those tasty meals we enjoy every day, it is fossil
fuels used to mine for phosphate. Together then we have ammonia and phosphate, which
we need to make fertilizer. And fert is the stuff that we need to grow food at scale. Of
course, we’ve not even begun to discuss the destroyed supply chain, labour shortages,
higher costs of, well… everything. No, we are barreling at speed towards a true catastrophe
where we have skinny people with flies on their faces staring at an empty bowl of porridge.
We WILL be seeing widespread starvation. I’m not kidding. I wish I was.
What else? You need food to keep the peace. And since we’ll be short food, we’ll be long
anger.

Oh, one other thing. You remember how I promised you we’d see resource nationalism?
Well, our Chinese friends just halted phosphate exports. That’s something like 30% of
global export volumes.
“Fertilizer prices have increased dramatically in recent years, and the news coming from
China will more than likely help thistrend continue,”said Theresa Sisung, field crops
specialist for the Michigan Farm Bureau. “Farmersshould talk to their retailerssooner
rather than later to discusstheir optionsfor purchasing fertilizer for their 2022 crop
needs.”
Prepare for a world of less. Less of everything. What can we do?
Well, I look forward to finally losing that last bit of belly fat that stops me from having a
truly cut six pack and well holding onto what we bought for this very purpose. Fertilizer
stocks

Whose newsletter/blog is that?

[jazz]

Whose newsletter/blog is that?

If gas were to reach $20 that would mean $500 oil.

If anyone remembers Peter Zeihan saying if globalization ever broke you would see continental scale famine.

[AlbertaFarmer5]

If gas were to reach $20 that would mean $500 oil.

If anyone remembers Peter Zeihan saying if globalization ever broke you would see continental scale famine.

Yes, but like everyone else, I thought he was talking about the future, not the day after tomorrow.

[Happytrails]

Priorities RULE. For centuries governments have understood that peace and stability only happen when people have enough to eat. Lately we have become so fat and complacent that food security is no longer the top priority. It’s sad to think of how much death and misery will result from today’s misdirected priorities.

[Hamloc]

Henry Hub natural gas has dropped from $6.31 Oct. 5 to $4.98 this morning, so yes a 20% drop. Natural gas prices in Europe have not dropped as much. Brent and WTI still going up as Oil is now being substituted for natural gas. If there is no shortage of energy stocks why are oil and coal still increasing in price? Do I think high energy prices will slow economic growth? Certainly but I don’t think as we are entering winter in the Northern hemisphere that we will see a moderation in energy prices with the present policy direction of European and North American governments. They are trying to force a transition before the infrastructure is in place.

Henry Hub natural gas closed up over 3% today at $5.30 USD.

[burnt]

Priorities RULE. For centuries governments have understood that peace and stability only happen when people have enough to eat. Lately we have become so fat and complacent that food security is no longer the top priority. It’s sad to think of how much death and misery will result from today’s misdirected priorities.

There are quite a few people who, over the past number of years, made the same observations as you just voiced. So I've been asking a stock question in response: What will it take to turn this attitude around?

The reply is invariably the same - a studious look, and then a shake of their head...

With the degree of dependency that the majority have developed, I fear it will be a lesson of deadly proportions.

It wouldn't need to be.