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As if it wasn't bad enough that oil prices are staying high, natural gas prices are now going up.
It probably should be little surprise, since all commodity prices are through the roof, but natural gas is beginning to ride on oil's coattails to ever higher prices.
Unlike oil, however, the market fundamentals seem to be somewhat solid for natural gas.
Analysts are predicting that gas is going to stay in the $11 to $12 per British thermal unit (BTU) range, as demand grows and reserves, especially in the United States, decline.
The US's Energy Department said that natural gas inventories have only risen 24 billion cubic feet, to just over 1.2 trillion cubic feet, as of April 18, which Dow Jones called a much smaller increase than expected.
Meanwhile, prices for natural gas have risen to their highest level in more than two years.
That puts inventory levels below the five-year average of 1.31 trillion cubic feet and significantly lower than 2007's almost 1.56 trillion cubic feet.
In North America, part of the problem is that Europe is ready to shell out more for natural gas than either America or Canada. And there seems to be little question that demand in the Old World is going to keep prices high, especially if another summer of record temperatures boosts demand to fuel power plants.
Now that natural gas from the United Kingdom's North Sea is falling by 59 million cubic metres a day as of Sunday - which carries 30 per cent of the UK's current natural gas demands and 40 per cent of the the nation's crude production - following the Forties oil pipeline shutdown due to a strike over pensions.
Rest assured that gas isn't the only thing that is going to take a hike thanks to the strike, which has raised the spectre of fuel shortages in Scotland and northern England, and is driving up the price of diesel and petrol across Europe.
Even now oil prices are hovering around the $120 per barrel mark. Remember the days when $100 per barrel was a pipe dream?
Already consumers are starting to feel the pinch as natural gas follows oil skyward.
Even before Sunday's strike, consumers in some parts of Canada are expecting prices to jump 55 per cent over the prices of May 2007.
As one analyst said, he once would have pegged $12 per Btu natural gas as astronomical, but no one saw $120 per barrel crude oil either.
As of Monday, prices are hovering in the $11 range, which is a two-year high for natural gas.
The good news? Higher natural gas prices mean more money to invest in new operations. The Petroleum Services Association of Canada boosted its activity forecast 14 per cent from 14,500 wells to 16,500 wells, and attributed what they call a "drilling revival" to increased interest in natural gas thanks to recent price hikes and a healthy long-term price outlook.
Meanwhile, talks are in place to build natural gas pipelines everywhere from Turkmenistan to the Subcontinent and from Turkey into Europe, just to name a few.
"This is the year of natural gas," said Jim Cramer of CNBC's Mad Money TV show in the United States.
His reasoning is pretty sound - as the price of oil increases, more people look to cheaper natural gas for everything from heating and cooling to powering cars.
That increased demand is translating into more natural gas drilling, more interest in the pipelines used for transport and more overall investment as energy companies look to fill the vacuum created by record oil.
- The writer is a freelance journalist based in Alaska, USA.
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