Current Natural Gas Fundamentals Explained Through Star Wars Characters

Recently I’ve been sounding like a broken record as I keep referencing how natural gas prices are re-enacting a certain scene from Star Wars.

It’s the one where the Millennium Falcon is being inextricably pulled towards the Death Star by a tractor beam…except in naturalgasworld™, natty is the Millennium Falcon and the Death Star is below the $3 mark. With me so far? Good, good. The analogies, however, do not end there. There is a number of themes which flow through natural gas like the force…and here are but a few.

Jabba the Hut = storage. Just like Jabba, storage is bulging, overbearing, and inflated (currently at a 398 Bcf surplus to last year’s level), and is set to exit the withdrawal season where it started – at a record level.

Lando Calrissian = weather. Just like the rogue that is Lando, the weather is not something you can count on. This has been exemplified by this winter period, where November and December were the warmest in over 30 years. That said, we cannot write off  the fact that the weather could flip to the cold side before we reach spring.

The Force = Forward pricing. It is a metaphysical, binding, and ubiquitous power, manifested through the emotions of both the light and dark side (h/t wookieepedia). (Translation: It is also a projection of where the current market believes futures prices are of fair value).

C3P0 & R2D2 = Electronic trading. Despite NYMEX having floor trading (Jawas?), the lion’s share of trading takes place on electronic platforms. So if you are trading, in this case…these are the droids you are looking for.

Yoda = conventional production. Albeit old-school and shrinking, conventional production of natural gas is still a powerful influence on total supply, but its relative strength is waning each year. 

Luke Skywalker = unconventional production. The future of naturalgasworld™ appears to be unconventional production from shale plays. Shale is considered ‘A New Hope’ to lead the battle against the Galactic Empire foreign dependence on energy, after being virtually unheard of a few years ago. The force is strong with this one.

Darth Vader = coal-to-gas switching. Literally moving from the dark side, natural gas consumption continues to be boosted by the move out of coal and into cheaper, cleaner-burning natural gas.

Princess Leia = LNG exports. If Luke is unconventional production, that makes Leia by association part of the future of naturalgasworld™ also, through Liquefied Natural Gas (LNG). In less than half a decade, the US will go from being the Saudi Arabia of natural gas (without the ability to export it) to being a global player.

I am sure there are plenty more Star Wars analogies in naturalgasworld™; please feel free to add any as a comment….thanks for playing!

5 Comments

  1. Three years ago I gave a presentation where I told the audience shale gas is the Energy Borg: Resistance is Futile

    #1
  2. Trail_Tramp

    Jar Jar Binks = Just like Jar Jar, anti-fracing protestors are naive, bumbling and impossible to understand when they talk.

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  3. keshob

    where’s han solo?

    #3
  4. Cody T

    Great analogy!

    Just curious though as to how the Sith (government) fits into this scenario. In Star Wars, the Sith used the dark side of the force to engineer/construct the Death Star. Any chance the establishment of regulatory barriers to speculative trading (i.e. Dodd Frank, which incentivizes producers and sanctioned swap dealers) is actually a ploy to keep prices low?

    With low prices providing an incentive toward crude to gas switching (nat gas powered or electric) in places like the auto industry, the government lessens the dependence on foreign and/or dirty energy sources. But when fully integrated they will likely subsidize the producers and tax the consumers, similar to how the Sith aligned with the Trade Federation and took over the Republic…dark times.

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  5. Am loving the responses…someone also asked how I overlooked Boba Fett. I feel another themed post coming soon, don’t worry!

    #5