From The Wall Street Journal
A trillion certainly sounds like a lot.
In all but the most depreciated currency, it would be a tremendous fortune. Even before the fracking boom transformed the American energy landscape in the last decade, though, a trillion cubic feet of natural gas laying ready to send to customers wasn’t all that much.
This week saw the start of “injection season”—the seven months when producers typically pump more gas into pipelines than gets consumed by all end-users combined. The excess is injected into underground storage, which already has a cushion left over from the just-ended heating, or “withdrawal,” season that begins in November.
The 1.1 trillion now in storage, as reported by the U.S. Energy Information Administration, is paltry—almost 31% below the five-year average for the same calendar week. The winter of 2016-17 ended with almost twice as much stored. In other words, in addition to all the gas users who will burn it or turn it into chemicals, an extra trillion cubic feet has to go into storage to start next heating season as well-prepared as in 2017.
Yet energy-futures traders are sanguine about the ability to do so, with futures fetching just $2.66 per million British thermal units on Friday. By contrast, the last time storage sank so low, back in 2014, futures spiked to a multiyear high above $6.00 during the winter.
The low price reflects faith in U.S. energy producers’ ability to tap massive reserves and meet growing demand from exports, electricity generation and industry while finding enough to survive the coming winter comfortably.
It isn’t enough to make much money, though. At such an inventory level, this is a testament to U.S. energy producers who have become too efficient for their own good.
