Gas prices will likely be much more volatile than it has been over the the past decade.
Key Takeaway #2
Demand for US natural gas has grown significantly, including large export volumes via LNG, connecting the US market to geopolitical events.
Key Takeaway #3
Weather, particularly extreme events, will drive significant volatility for gas.
Key Takeaway #4
The lack of storage growth relative to supply and demand growth will lead to more volatile markets.
Gas price volatility is likely here to stay for the next couple of years. Online chat forum ChatGPT wrote a few persuasive arguments on why it thinks volatility will be different now vs 2009-2021, when prices were stable. There are several nuances and discussions ChatGPT has failed to delve into as to why volatility will more closely align to 2000-2008 prices.
Excerpt from https://chat.openai.com/chat
Q: Will natural gas prices be more volatile than from 2009-2021?
A: “It is difficult to predict the future trajectory of natural gas prices with certainty, but it is possible that natural gas prices could be more volatile than they were from 2009-2021. There are several reasons why this could be the case:
Increased Demand: As the world transitions towards cleaner energy sources, there will likely be an increased demand for natural gas, which could lead to greater price volatility. This is because any supply disruptions or imbalances will have a more significant impact on prices when demand is high.
Climate Change: Climate change is likely to increase the frequency and severity of extreme weather events, such as heatwaves and cold snaps, which can impact natural gas demand and supply. As a result, natural gas prices could become more volatile due to weather-related disruptions.
Geopolitical Tensions: Geopolitical tensions, such as those between Russia and Ukraine, have historically impacted natural gas prices. As geopolitical tensions continue to rise, there is a possibility that natural gas prices could become more volatile.
Regulatory Changes: Changes in regulations, such as stricter environmental regulations or changes in trade policies, could impact natural gas prices. These changes could lead to supply disruptions or imbalances, which could contribute to greater price volatility.
Overall, it is possible that natural gas prices could be more volatile in the coming years than they were from 2009-2021 due to various factors. It is important for stakeholders in the natural gas industry to monitor these factors and adjust their strategies accordingly to manage price volatility effectively.
These are all valid points, but the key is to explain the history of the price regime and how we got to the stable period of 2009-2021.
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Gas price volatility is likely here to stay for the next couple of years. Online chat forum ChatGPT wrote a few persuasive arguments on why it thinks volatility will be different now vs 2009-2021, when prices were stable. There are several nuances and discussions ChatGPT has failed to delve into as to why volatility will more closely align to 2000-2008 prices.
Excerpt from https://chat.openai.com/chat
Q: Will natural gas prices be more volatile than from 2009-2021?
A: “It is difficult to predict the future trajectory of natural gas prices with certainty, but it is possible that natural gas prices could be more volatile than they were from 2009-2021. There are several reasons why this could be the case:
Increased Demand: As the world transitions towards cleaner energy sources, there will likely be an increased demand for natural gas, which could lead to greater price volatility. This is because any supply disruptions or imbalances will have a more significant impact on prices when demand is high.
Climate Change: Climate change is likely to increase the frequency and severity of extreme weather events, such as heatwaves and cold snaps, which can impact natural gas demand and supply. As a result, natural gas prices could become more volatile due to weather-related disruptions.
Geopolitical Tensions: Geopolitical tensions, such as those between Russia and Ukraine, have historically impacted natural gas prices. As geopolitical tensions continue to rise, there is a possibility that natural gas prices could become more volatile.
Regulatory Changes: Changes in regulations, such as stricter environmental regulations or changes in trade policies, could impact natural gas prices. These changes could lead to supply disruptions or imbalances, which could contribute to greater price volatility.
Overall, it is possible that natural gas prices could be more volatile in the coming years than they were from 2009-2021 due to various factors. It is important for stakeholders in the natural gas industry to monitor these factors and adjust their strategies accordingly to manage price volatility effectively.
These are all valid points, but the key is to explain the history of the price regime and how we got to the stable period of 2009-2021.
The history goes much farther back than Henry Hub prices – below is the commercial customer prices since 1983. Deregulation of the gas industry started in 1978 but slowly advanced from FERC order 436 in 1985 and the Policy Act of 1992.
Figure: Monthly Natural Gas Price ($/mmbtu) for US Commercial Customers, 1983-2025 Source: EIA
Interestingly, the goal of the deregulation at the time was to lower of natural gas prices. In absolute terms, that did not happen, but on a consumption basis it did. Deregulation basically stimulated gas demand. Uses of natural gas accelerated, particularly in the power space as that was a focus of deregulation. Significant gas demand from power was the main culprit for the price rise in the 2000s.
To counter this demand rise, the development of shale occurred; this enabled production to meet demand, flattening out prices for over a decade. However, the solution to the balance was done without increasing storage.
ChatGPT’s points make sense: we agree prices for the next years are likely to more resemble 2000-2008 vs 2009-2021. However, a key element was missing in the discussion – Storage. Storage plays a crucial role to balance the market, given that the use of natural gas is not constant, particularly as it is used to balance renewable energy. Storage for natural gas is not as easy as it is for solid/liquid fossil fuels. The energy density of natural gas volumetrically is 1000x less than oil. This makes natural gas a challenge to store.
Large infrastructure costs do need to be regulated IF you want to maintain prices in a range. Free market development for large infrastructure costs require large price incentives to pay for the risk of large cost. This development also takes years.
Clearly the US market is in an energy transition, with over 130 GW of coal retirements since 2010 and 100+GW of solar built, along with 160+GW of wind generation. Weather has been volatile and if that continues, along with the lack of storage, volatility is more likely. ChatGPT’s conclusion is key for large energy users such as miners: “It is important for stakeholders in the natural gas industry to monitor these factors and adjust their strategies accordingly to manage price volatility effectively.” Effective hedging strategies will separate the companies that stay in business over the next few years from those who will no longer exist. Please contact us to help you develop an effective hedging strategy.
Figure: US Natural Gas Consumption (MMcf) 1970 - 2020 Source: EIA
Miner WoW View
Mining economics stabilized over the past week.
The S19JPro breakeven price is between $80-$90/MWh.
Figure: Weekly Average Cash Contribution After Power Expense Note: Assumes a PUE of 1.12 Source: BitOoda, Bloomberg, Coinmetrics
Henry Hub WoW
Another week with not much change.
The Freeport LNG facility seems to be on track to start by the end of March.
Source: BitOoda, CME Group
PJM WoW
For the PJM region, we use PJM-W hub as the benchmark. PJM-W is the most traded power hub in the US.
We saw only minor changes in the curve this week.
Source: BitOoda, CME Group
ERCOT WoW
For the ERCOT region, we use ERCOT-North hub as the benchmark. ERCOT-North is the most traded power hub for ERCOT.
We saw only minor changes this week.
Source: BitOoda, CME Group
CAISO WoW
For the CAISO region, we use SP-15 hub as the benchmark. SP-15 is located in Southern California.
CAISO is slightly down from last week.
Source: BitOoda, CME Group
NYISO WoW: NY-G
This slide uses the NY-G hub as the benchmark for the NYISO region. NY-G is the most traded power hub in NYISO.
We saw only minor changes this week.
Source: BitOoda, CME Group
NYISO WoW: NY-A
This slide adds NY-A for the NYISO region.
NY-A continues to move on its own terms up throughout the curve.
Source: BitOoda, CME Group
Disclosures
Purpose
This research is only for the clients of BitOoda. This research is not intended to constitute an offer, solicitation, or invitation for any securities and may not be distributed into jurisdictions where it is unlawful to do so. For additional disclosures and information, please contact a BitOoda representative at info@bitooda.io.
Analyst Certification
David Bellman, the research analyst denoted by an “AC” on the cover of this report, hereby certifies that all of the views expressed in this report accurately reflect his personal views, which have not been influenced by considerations of the firm’s business or client relationships.
Conflicts of Interest
This research contains the views, opinions, and recommendations of BitOoda. This report is intended for research and educational purposes only. We are not compensated in any way based upon any specific view or recommendation.
General Disclosures
Any information (“Information”) provided by BitOoda Holdings, Inc., BitOoda Digital, LLC, BitOoda Technologies, LLC or Ooda Commodities, LLC and its affiliated or related companies (collectively, “BitOoda”), either in this publication or document, in any other communication, or on or through http://www.bitooda.io/, including any information regarding proposed transactions or trading strategies, is for informational purposes only and is provided without charge. BitOoda is not and does not act as a fiduciary or adviser, or in any similar capacity, in providing the Information, and the Information may not be relied upon as investment, financial, legal, tax, regulatory, or any other type of advice. The Information is being distributed as part of BitOoda’s sales and marketing efforts as an introducing broker and is incidental to its business as such. BitOoda seeks to earn execution fees when its clients execute transactions using its brokerage services. BitOoda makes no representations or warranties (express or implied) regarding, nor shall it have any responsibility or liability for the accuracy, adequacy, timeliness or completeness of, the Information, and no representation is made or is to be implied that the Information will remain unchanged. BitOoda undertakes no duty to amend, correct, update, or otherwise supplement the Information.
The Information has not been prepared or tailored to address, and may not be suitable or appropriate for the particular financial needs, circumstances or requirements of any person, and it should not be the basis for making any investment or transaction decision. The Information is not a recommendation to engage in any transaction. The digital asset industry is subject to a range of inherent risks, including but not limited to: price volatility, limited liquidity, limited and incomplete information regarding certain instruments, products, or digital assets, and a still emerging and evolving regulatory environment. The past performance of any instruments, products or digital assets addressed in the Information is not a guide to future performance, nor is it a reliable indicator of future results or performance.
Ooda Commodities, LLC is a member of NFA and is subject to NFA’s regulatory oversight and examinations. However, you should be aware that NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets.
BitOoda Technologies, LLC is a member of FINRA.
“BitOoda”, “BitOoda Difficulty”, “BitOoda Hash”, “BitOoda Compute”, and the BitOoda logo are trademarks of BitOoda Holdings, Inc.
Copyright 2022 BitOoda Holdings, Inc. All rights reserved. No part of this material may be reprinted, redistributed, or sold without prior written consent of BitOoda.
Gas price volatility is likely here to stay for the next couple of years. Online chat forum ChatGPT wrote a few persuasive arguments on why it thinks volatility will be different now vs 2009-2021, when prices were stable. There are several nuances and discussions ChatGPT has failed to delve into as to why volatility will more closely align to 2000-2008 prices.
Excerpt from https://chat.openai.com/chat
Q: Will natural gas prices be more volatile than from 2009-2021?
A: “It is difficult to predict the future trajectory of natural gas prices with certainty, but it is possible that natural gas prices could be more volatile than they were from 2009-2021. There are several reasons why this could be the case:
Increased Demand: As the world transitions towards cleaner energy sources, there will likely be an increased demand for natural gas, which could lead to greater price volatility. This is because any supply disruptions or imbalances will have a more significant impact on prices when demand is high.
Climate Change: Climate change is likely to increase the frequency and severity of extreme weather events, such as heatwaves and cold snaps, which can impact natural gas demand and supply. As a result, natural gas prices could become more volatile due to weather-related disruptions.
Geopolitical Tensions: Geopolitical tensions, such as those between Russia and Ukraine, have historically impacted natural gas prices. As geopolitical tensions continue to rise, there is a possibility that natural gas prices could become more volatile.
Regulatory Changes: Changes in regulations, such as stricter environmental regulations or changes in trade policies, could impact natural gas prices. These changes could lead to supply disruptions or imbalances, which could contribute to greater price volatility.
Overall, it is possible that natural gas prices could be more volatile in the coming years than they were from 2009-2021 due to various factors. It is important for stakeholders in the natural gas industry to monitor these factors and adjust their strategies accordingly to manage price volatility effectively.
These are all valid points, but the key is to explain the history of the price regime and how we got to the stable period of 2009-2021.
The history goes much farther back than Henry Hub prices – below is the commercial customer prices since 1983. Deregulation of the gas industry started in 1978 but slowly advanced from FERC order 436 in 1985 and the Policy Act of 1992.
Figure: Monthly Natural Gas Price ($/mmbtu) for US Commercial Customers, 1983-2025 Source: EIA
Interestingly, the goal of the deregulation at the time was to lower of natural gas prices. In absolute terms, that did not happen, but on a consumption basis it did. Deregulation basically stimulated gas demand. Uses of natural gas accelerated, particularly in the power space as that was a focus of deregulation. Significant gas demand from power was the main culprit for the price rise in the 2000s.
To counter this demand rise, the development of shale occurred; this enabled production to meet demand, flattening out prices for over a decade. However, the solution to the balance was done without increasing storage.
ChatGPT’s points make sense: we agree prices for the next years are likely to more resemble 2000-2008 vs 2009-2021. However, a key element was missing in the discussion – Storage. Storage plays a crucial role to balance the market, given that the use of natural gas is not constant, particularly as it is used to balance renewable energy. Storage for natural gas is not as easy as it is for solid/liquid fossil fuels. The energy density of natural gas volumetrically is 1000x less than oil. This makes natural gas a challenge to store.
Large infrastructure costs do need to be regulated IF you want to maintain prices in a range. Free market development for large infrastructure costs require large price incentives to pay for the risk of large cost. This development also takes years.
Clearly the US market is in an energy transition, with over 130 GW of coal retirements since 2010 and 100+GW of solar built, along with 160+GW of wind generation. Weather has been volatile and if that continues, along with the lack of storage, volatility is more likely. ChatGPT’s conclusion is key for large energy users such as miners: “It is important for stakeholders in the natural gas industry to monitor these factors and adjust their strategies accordingly to manage price volatility effectively.” Effective hedging strategies will separate the companies that stay in business over the next few years from those who will no longer exist. Please contact us to help you develop an effective hedging strategy.
Figure: US Natural Gas Consumption (MMcf) 1970 - 2020 Source: EIA
Miner WoW View
Mining economics stabilized over the past week.
The S19JPro breakeven price is between $80-$90/MWh.
Figure: Weekly Average Cash Contribution After Power Expense Note: Assumes a PUE of 1.12 Source: BitOoda, Bloomberg, Coinmetrics
Henry Hub WoW
Another week with not much change.
The Freeport LNG facility seems to be on track to start by the end of March.
Source: BitOoda, CME Group
PJM WoW
For the PJM region, we use PJM-W hub as the benchmark. PJM-W is the most traded power hub in the US.
We saw only minor changes in the curve this week.
Source: BitOoda, CME Group
ERCOT WoW
For the ERCOT region, we use ERCOT-North hub as the benchmark. ERCOT-North is the most traded power hub for ERCOT.
We saw only minor changes this week.
Source: BitOoda, CME Group
CAISO WoW
For the CAISO region, we use SP-15 hub as the benchmark. SP-15 is located in Southern California.
CAISO is slightly down from last week.
Source: BitOoda, CME Group
NYISO WoW: NY-G
This slide uses the NY-G hub as the benchmark for the NYISO region. NY-G is the most traded power hub in NYISO.
We saw only minor changes this week.
Source: BitOoda, CME Group
NYISO WoW: NY-A
This slide adds NY-A for the NYISO region.
NY-A continues to move on its own terms up throughout the curve.
Source: BitOoda, CME Group
Disclosures
Purpose
This research is only for the clients of BitOoda. This research is not intended to constitute an offer, solicitation, or invitation for any securities and may not be distributed into jurisdictions where it is unlawful to do so. For additional disclosures and information, please contact a BitOoda representative at info@bitooda.io.
Analyst Certification
David Bellman, the research analyst denoted by an “AC” on the cover of this report, hereby certifies that all of the views expressed in this report accurately reflect his personal views, which have not been influenced by considerations of the firm’s business or client relationships.
Conflicts of Interest
This research contains the views, opinions, and recommendations of BitOoda. This report is intended for research and educational purposes only. We are not compensated in any way based upon any specific view or recommendation.
General Disclosures
Any information (“Information”) provided by BitOoda Holdings, Inc., BitOoda Digital, LLC, BitOoda Technologies, LLC or Ooda Commodities, LLC and its affiliated or related companies (collectively, “BitOoda”), either in this publication or document, in any other communication, or on or through http://www.bitooda.io/, including any information regarding proposed transactions or trading strategies, is for informational purposes only and is provided without charge. BitOoda is not and does not act as a fiduciary or adviser, or in any similar capacity, in providing the Information, and the Information may not be relied upon as investment, financial, legal, tax, regulatory, or any other type of advice. The Information is being distributed as part of BitOoda’s sales and marketing efforts as an introducing broker and is incidental to its business as such. BitOoda seeks to earn execution fees when its clients execute transactions using its brokerage services. BitOoda makes no representations or warranties (express or implied) regarding, nor shall it have any responsibility or liability for the accuracy, adequacy, timeliness or completeness of, the Information, and no representation is made or is to be implied that the Information will remain unchanged. BitOoda undertakes no duty to amend, correct, update, or otherwise supplement the Information.
The Information has not been prepared or tailored to address, and may not be suitable or appropriate for the particular financial needs, circumstances or requirements of any person, and it should not be the basis for making any investment or transaction decision. The Information is not a recommendation to engage in any transaction. The digital asset industry is subject to a range of inherent risks, including but not limited to: price volatility, limited liquidity, limited and incomplete information regarding certain instruments, products, or digital assets, and a still emerging and evolving regulatory environment. The past performance of any instruments, products or digital assets addressed in the Information is not a guide to future performance, nor is it a reliable indicator of future results or performance.
Ooda Commodities, LLC is a member of NFA and is subject to NFA’s regulatory oversight and examinations. However, you should be aware that NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets.
BitOoda Technologies, LLC is a member of FINRA.
“BitOoda”, “BitOoda Difficulty”, “BitOoda Hash”, “BitOoda Compute”, and the BitOoda logo are trademarks of BitOoda Holdings, Inc.
Copyright 2022 BitOoda Holdings, Inc. All rights reserved. No part of this material may be reprinted, redistributed, or sold without prior written consent of BitOoda.
