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The July natural gas wholesale contract rose Friday from 30-day lows on some bargain hunting by energy traders and expectations that demand-inducing heat would return next week to many U.S. markets. The July wholesale contract settled 3.6 cents, or 0.86%, higher, at $4.229 a million British thermal units on the New York Mercantile Exchange. These wholesale contracts fell to their lowest price in a month Thursday after the Energy Information Administration reported that U.S. stockpiles grew by 98 billion cubic feet last week while most energy traders were expecting a number around the 90 bcf area. The demand inducing heat is being indicated in the Texas region with much above forecasted temperatures through the middle of July with above average temperatures in the Southeast and slightly above normal in the Northeast as well in the 6-10 day forecasts.
On the natural gas drilling front, natural gas companies have been placing large bets recently on the horizontal wells they are exploring and drilling for and stating they will deliver big profits and also provide a vast new source of energy for the United States. But the natural gas may not be as easy and cheap to extract from shale formations deep underground as the companies are saying, according to hundreds of industry emails and internal documents and an analysis of data from thousands of wells. In the emails, energy executives, industry lawyers, state geologists and market analysts voice skepticism about lofty forecasts and question whether companies are intentionally, and even illegally, overstating the productivity of their wells and the size of their reserves. Some analysts are concerned with all the money pouring in from investors that this is reminiscent of the dot com era back in the early 2000’s. Some energy insider’s event went to say that shale plays are just giant Ponzi schemes and the economics just do not work. The data show that while there are some very active wells, they are often surrounded by vast zones of less-productive wells that in some cases cost more to drill and operate than the gas they produce is worth. Also, the amount of gas produced by many of the successful wells is falling much faster than initially predicted by energy companies, making it more difficult for them to turn a profit over the long run.
On the efficiency front this morning, the Natural Resources Defense Council has ranked the largest energy hogs in the home and the thing that’s gobbling up the most energy is probably not what most folks think. It seems the largest energy hog is coming out to be the pairing of the video recorder and the cable box from the cable company. The environmental monitoring group released a study last week that indicates that a high definition cable or satellite set-top box when combined with a high-definition DVR uses up to 446 kilowatt hours per year which seems that this is more than the new Energy Star rated 21 cubic-foot-refrigerator which uses about 415 kwh per year. The study indicates that the combination of an HD DVR and an HD cable or satellite box in a house wastes many hours of energy even when not in use, the group found. The study reports that it costs American consumers more in electricity bills per year when they're not using their DVR and set-top box than when they are in use.
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