Arkansas farmers to see higher input costs continue in 2023

by George Jared (gjared@talkbusiness.net)

A major issue that plagued Arkansas farmers in 2022 was the steep rise in input costs. Part of the problem started in February 2022 when Russia invaded Ukraine. The invasion led to a steep increase in fertilizer costs and fuel costs.

Russia exports about 19% of the world’s potassium and exports about 15% of the world’s nitrogen, according to the United Nations. The country also produces about 14% of the global market’s phosphorus. All of these inputs are found in fertilizers.

Natural gas is a key component in fertilizer production and Russia is the second leading producer in the world. As 2023 continues to unfold, the dynamics that pushed input costs higher for farmers are not projected to go down in most sectors, according to the University of Arkansas System Division of Agriculture’s Enterprise Budget forecasts. The forecasts are a tool that farmers can use to project what costs could be during the upcoming growing season.

https://talkbusiness.net/2023/03/arkansas-farmers-to-see-higher-input-costs-continue-in-2023/

Quarterly natural gas consumption falls to lowest level in 5 years

by Jeff Della Rosa (JDellaRosa@nwabj.com)

U.S. natural gas consumption is expected to be lower in the first quarter than in any of the same periods since 2018, according to the U.S. Energy Information Administration (EIA). First-quarter average consumption of about 99 billion cubic feet per day is the least for any first quarter since 2018.

The EIA released Tuesday (March 7) the March Short-Term Energy Outlook that shows January and February were likely to be among the warmest on record in data going back to 1895, and this contributed to lower heating demand, resulting in lower consumption. This will lead to lower prices and more natural gas in storage.

EIA expects 2023 wholesale prices of natural gas to be half of the 2022 average. Inventories are projected to be 23% more than the five-year average at the end of the first quarter.

https://talkbusiness.net/2023/03/quarterly-natural-gas-consumption-falls-to-lowest-level-in-5-years/

Arkansas’ natural gas severance tax revenue on pace to set a new record

by Michael Tilley (mtilley@talkbusiness.net)

Arkansas’ natural gas severance tax revenue is on track in fiscal year 2023 to set a new record and top $100 million if trends continue in the next four months. The gain comes in the face of industry criticism that President Joe Biden’s energy policies would curtail production.

Through the first eight months of the fiscal year (July 2022-February 2023), the natural gas severance tax has generated $61.556 million, or an average of $8.46 million a month. The average is well ahead of the $6.552 million in fiscal year 2015, when collections set a record of $78.634 million.

Fiscal 2023 is part of a two-year trend in which revenues have recovered from a dramatic decline that began in fiscal year 2016 when revenue was $31.858 million, well below the 2015 record. Revenues reached a recent low of just $14.067 million 2020.

https://talkbusiness.net/2023/03/arkansas-natural-gas-severance-tax-revenue-on-pace-to-set-a-new-record/

EIA slashes price forecast for natural gas amid warmer weather

by Jeff Della Rosa (JDellaRosa@nwabj.com)

U.S. natural gas price projections have been lowered as a warmer-than-average start to 2023 has reduced natural gas consumption to below-average levels, according to the U.S. Energy Information Administration (EIA). The projection reflects a nearly 30% price cut from January expectations.

The EIA released Tuesday (Feb. 7) the February Short-Term Energy Outlook that shows natural gas prices at the Henry Hub are expected to fall by 47% to $3.40 per million British thermal units in 2023 from 2022.

“U.S. natural gas inventories fell by less than our expectations in January because of the warmer-than-average weather,” said EIA Administrator Joe DeCarolis. “With more natural gas in inventory, we reduced our forecast for natural gas prices over the coming year. There is still a lot of uncertainty, including the possibility of extreme weather later this winter that could increase demand and temporarily slow down production, but those possibilities decrease as we approach spring.”

https://talkbusiness.net/2023/02/eia-slashes-price-forecast-for-natural-gas-amid-warmer-weather/

Fewer uncompleted wells may hurt oil production growth; coal-fired generation to fall

by Jeff Della Rosa (JDellaRosa@nwabj.com)

Crude oil production growth could be limited in the United States amid fewer drilled but uncompleted wells and natural gas pipeline constraints, according to the U.S. Energy Information Administration (EIA). Meanwhile, high natural gas prices aren’t expected to keep coal-fired electricity generation from declining this year.

Between July 2020 and September 2022, more oil wells were completed than were drilled in the United States. As a result, the number of drilled but uncompleted wells fell to 4,333, the fewest since at least December 2013.

The decline in the number of drilled but uncompleted wells has coincided with high oil prices and rising domestic production. According to Baker Hughes, the number of active oil rigs has risen to 610 as of Oct. 14 from 172 rigs on Aug. 14, 2020. While the number of active oil-directed rigs that drill new wells increased earlier this year, the rig count has remained flat since July, according to the EIA.

https://talkbusiness.net/2022/10/fewer-uncompleted-wells-may-hurt-oil-production-growth-coal-fired-generation-to-fall/

Residents can expect higher heating bills this winter, according to EIA

by Talk Business & Politics staff (staff2@talkbusiness.net)

U.S. households will likely pay more to heat their homes this winter, according to the U.S. Energy Information Administration (EIA). Compared to last winter, households are expected to spend 28% more on natural gas, 27% more on heating oil, 10% more on electricity and 5% more on propane.

On Wednesday (Oct. 12), the EIA released its 2022 Winter Fuels Outlook showing that U.S. residential energy prices will be higher this winter and heating fuel consumption is projected to be higher amid a colder winter than last year.

The National Oceanic and Atmospheric Administration expects the United States to have a slightly colder winter than last year, leading to higher consumption levels. The higher energy prices and consumption levels contribute to higher heating costs for households.

https://talkbusiness.net/2022/10/residents-can-expect-higher-heating-bills-this-winter-according-to-eia/

Energy leaders say more supply, stable policy needed for lower costs

by Roby Brock (roby@talkbusiness.net)

As inflation eats into family and business budgets, energy is one component of the economy that has been driving higher prices. Two energy leaders – Chad Kinsley, VP of operations for Black Hills Energy, and Lauren Waldrip, executive director of the Arkansas Advanced Energy Association, shared their perspectives in Talk Business & Politics’ latest State of the State report on energy.

Kinsley, whose company provides natural gas across north Arkansas, said the COVID-19 pandemic disrupted the supply and demand balance that had kept energy prices stable and low.

“We’re seeing inflation across all aspects of the economy and natural gas commodity prices, like you mentioned, certainly are no exception. Unfortunately, that’s impacting our customer’s bills and kind of a short answer is, it’s supply and demand in the marketplace,” Kinsley said…

https://talkbusiness.net/2022/04/energy-leaders-say-more-supply-stable-policy-needed-for-lower-costs/