Reconciling US household energy costs with “raw material” wholesale costs – US households could/should be paying almost nothing for natural gas – “renewables” are “de facto” price-gouging mechanisms

Buckle up, buttercups! You may get a shock – or maybe not for those who have eyes wide open!

The objective of this article is to point out the exorbitant prices paid by US households for their energy – it is far worse in the “woke” US States and, of course, in pathetically stupid countries dominated by the lunatic chicken little “Greens” like the UK and Germany. (Check out the price of using chicken poop as a power source below).

Enquiring minds want to know why politicians everywhere aren’t up in arms about the impoverishment of their people – especially the vulnerable – not just by the obvious “super price gouging” of renewable energy, but even that of price gouging of “traditional” energy supplies.

Could it be that politicians everywhere simply cannot do arithmetic and simply hide that fact behind bullshit?

Small wonder that the US has a national debt of 35 trillion bucks costing over a trillion dollars a year in interest.

A few days ago, I posted this article that tried to reconcile the costs of electricity produced from natural gas, coal and oil, with their electricity “content” and with futures prices for each.

Tilting at windmills – just how much more does offshore wind power cost households compared to fossil fuel sources of energy? Calling all electricity, energy, commodity traders and mathematicians! (substack.com)

I asked for an “assist” in verifying my arithmetic – none so far, but I found this website with an article from October 2023 by R. Scott Frazier:

True Cost of Energy Comparisons – Apples to Apples | Oklahoma State University (okstate.edu)

Brilliant! It has this table that shows the energy content and a standardised cost per billion BTU. It explains all the conventions for each commodity and has a spreadsheet where you can plug in your own numbers to tailor costs to your own personal circumstances. It also explains how the efficiency of household appliances can impact your bills – as opposed to the efficiency of the generators of energy to your household (a new appliance may use less power than an older, less well-maintained appliance).

Here’s the table in R. Scott’s article:

(Note the text states, “Prices for fuels will be in dollars per MMBtu” and “The final answers will be in dollars per MMBtu.” – MM = a thousand, thousand = one million BTU, compared to the column heading in the table of a billion BTU – not helpful!).

“A Btu is about the amount of heat energy that a paper match would give off if burned. “

“…  the “Therm,” which equals 100,000 Btu’s, or one-tenth of an MMBtu”.

“Natural gas is usually bought and sold in MMBtu’s or Therm’s. Sometimes natural gas is described as 1,000 cubic feet (MCF) which is approximately 1 MMBtu.”

Poultry litter and natural gas are the cheapest - electricity (including renewables costs) the most expensive, though a heat pump reduces the cost to one comparable to others.

Hey! Maybe this is a key reason why so many chicken farms and chickens have been destroyed?

What is chicken litter? Uses And Effects - Poultryabc.com

Turning Chicken Poop Into Power : NPR

The “apples to apples” comparison is done using millions (not the billions in the column heading?) of Therms. The R. Scott article describes these units and all the others in the table.

I can conceptualise kWh more readily than mmBTU and R. Scott helps with this:

“Electrical energy is described by Kilowatt-hours, which can be directly converted to Btu’s if describing heat energy (1 kWh = 3,412 Btu).”

So, a million BTU (mmBTU) = 293.08 kWh – call it 300 kWh.

All useful information, so what’s my point?

Well, in my SubStack article referenced at the top of this piece I referenced the prices of natural gas, coal and oil futures.

These futures contracts have a specification and a price per contract.

The specification for natural gas is 10,000 MMBTU and each contract costs around 2.20 bucks and is deliverable. 10,000 million – 10 billion BTU costs 2 dollars 20 cents!

Henry Hub Natural Gas Futures Contract Specs - CME Group

Converting 10,000 MMBTU to kWh (divide by 3,412) = around 3 million kWh = 3,000 mWh.

For 2 dollars 20 cents!

Now the efficiency of gas-fired power stations might be just 33%, so we can dial this down to 1 million kWh or 1.000 mWh.

*Fun fact: Domestic gas production accounts for nearly 95 percent of all natural gas consumed in the United States and shale gas production now accounts for more than 40 percent of gas produced.”

https://www.peoplesgas.com/company/ournaturalgassystem/naturalgasfactslinks/

One thousand kWh (one mWh) for $2.20 – how does that compare to the price charged to consumers in the US?

Well, using Brave browser – which I am using more and more as it gives you objective answers rather than the left-wing “woke” crap you get from Bing, with summary answers to a search first with references underneath, rather than screeds of “politically correct” references that you have to scroll through! – we have this:

·        National average: Not explicitly stated, but homes in the Midwest consumed 76.1 MMBtu per household in 2020, which is higher than the national average.

·        Regional average (Georgia): 717 therms per household per year, according to GA Gas Savings.

·        Monthly consumption (UtilitySmarts): $150-$200, translating to approximately 750 therms per year.

That’s for natural gas, here is overall household energy consumption:

·        Estimated average annual US household energy consumption: 9,000 to 12,000 kWh/year

·        Based on daily consumption: 10,220 kWh/year (using 28 kWh/day)

·        Official EIA estimate (2022): 10,791 kWh/year

Total spend on average per US household:

·        “$4,000 to $6,000 (based on the Electric Choice and ValuePenguin tables)

·        $6,888 (based on the “Average Cost Of Utility Bills” table)

To provide a more conservative estimate, let’s take the midpoint of these ranges:

·        Average annual spend by US households on utilities: approximately $5,444

So, US household natural gas consumption is around 750 therms per year, A therm is 100,000 BTUs, so 750 therms = 75 million BTU’s (75 mmBTU’s).

A futures contract for 10,000 mmBTU’s costs two dollars 20 cents, so the “raw material” cost of natural gas to households = 75 divided by 10,000 times $2.20 = 16 and a half cents!!!!

How much do US households pay for natural gas?

Using Brave browser, we have this “the average price charged to US households for natural gas is likely to be around $10-12 per 1,000 cubic feet, with some states having significantly higher or lower prices.”

Ugh, another metric – cubic feet. Well, R. Scott helps with that:

“Sometimes natural gas is described as 1,000 cubic feet (MCF) which is approximately 1 MMBtu.”

US households pay around 11 bucks per MMBTU, when the futures contract costs are 2 dollars 20 cents for 10,000 MMBTU!!!!

Mind boggling! The equivalent futures contract price using the household price would be $110,000 per 10,000 MMBTU!

Talk about price gouging – or the result of regulations etc. Even if we adjust for just 33% efficiency and multiply by 10 to reflect costs along the pipelines in the supply chain, which is still an incredible mark-up!

Here’s a few more key facts on natural gas from here:

https://www.peoplesgas.com/company/ournaturalgassystem/naturalgasfactslinks/

·        Natural gas serves nearly 66 million homes, 5 million businesses, 195,000 factories, and 1,900 electric generating units

·        On a daily basis, the average U.S. home uses 168 cubic feet of natural gas

·        Fertilizer used to grow crops is composed almost entirely of natural gas components, so U.S. agricultural producers rely on an affordable, stable supply of natural gas

·        Natural gas utilities do not profit from the natural gas they deliver; they earn revenue from the service and delivery fees they charge customers to transport the natural gas to them

For more detail on the natural gas supply chain, check this out:

https://www.aemc.gov.au/energy-system/gas/gas-supply-chain

I have not made any mention of “renewable energy” costs.

The UK just signed contracts for offshore wind electricity generation priced at around 100 bucks per mWh (82 pounds sterling). These are “raw material” prices that will be multiplied many times over and passed on to UK households. The UK has just increased its “price cap” for household energy bills (with whatever gas/electricity mix that might be) by around 12% by January 2025. The UK government has also eliminated the assistance given to old age pensioners to pay for its program of developing “renewable” such as offshore wind – whacking the poor and the elderly with higher prices and reduce welfare assistance.

100 bucks per mWh looks to be around the same price being paid for offshore wind in the US.

Let’s convert that to mmBTU and compare it with the natural gas futures contract.

One mWh = 3.412 MMBTU for those 100 bucks

The natural gas futures contract is for 10,000 MMBTU for 2 bucks 20 cents.

One lot of the natural gas futures contract produces around 3 mWh for those two dollars twenty cents.

So, to pursue the “net zero” pipe dream of the energy quacks, those getting electricity from offshore wind are paying 100 bucks per mWh, rather than the 2.20/3 = 73 cents per mWh for natural gas.

Even adjusting for leaks in gas pipelines of 2/3 of gas, that still leaves the costs of offshore wind at around 50 TIMES the price of natural gas.

Keep in mind that older offshore wind farms everywhere have been bought ad paid for many times over with tax subsidies and much higher power bills for the years, even decades that they have been “installed”.

Solar panels?

Using Brave, for households:

Average cost of electricity produced: $7,200 (system cost) ÷ 30 kWh (annual energy production) ≈ $0.24 per kWh.

And for solar farms:

Average Cost of Electricity per Watt: approximately $0.94 (midpoint of $0.80-$1.36)

These numbers need investigating further ad are based on the average of these:

Considering the above components and the LCOE estimate, the average cost of electricity produced by solar panel farms can be summarized as follows:

·        Average Cost per Watt: $0.80-$1.36 (solar farm cost per watt)

·        Average Cost per Watt (BOS): $0.08 (electrical balance of system cost)

·        Average Cost per Watt (Solar Panel): $0.90-$1.50 (polycrystalline solar panel cost)

·        Average Cost per Watt (LCOE): approximately $0.068

Probably the BOS and LCOE are closer to the mark – so around 7-8 cents per Watt or around 7=8 bucks per kWh – around a third the price of household solar panels, but still multiple times the price of natural gas!

Feedback welcome!

Onwards!!!

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