EIA "energy cookie":
The U.S. average retail price for regular gasoline was $2.51/gallon (g) on August 31, the lowest price for the Monday before Labor Day since 2004, and 95¢/g lower than the same time last year. Declines in crude oil prices are the main driver behind falling U.S. gasoline prices. Lower crude oil prices reflect concerns about economic growth in emerging markets, expectations of higher oil exports from Iran, and continuing actual and expected growth in global crude oil inventories. --- EIAThat's good news because a lot of folks don't have jobs based on today's job report.
RBN Energy: crude prices and China's (lack of) growth threaten the boom. (Archived.)
Projected growth in U.S. methanol production was based in large part on the expectation that domestic natural gas prices would remain significantly lower (on a per-MMBtu basis) than the price of crude oil, and that Asian demand for U.S.-sourced methanol would continue rising at a fast clip.
Today both of those assumptions look dicey. Natural gas prices remain low, but crude prices have languished below $50/Bbl for most of the past two months, and there are worries that China (by far the world’s largest methanol consumer) may be an economic bubble about to burst. Today, we consider recent developments that could slow the long-anticipated growth in natural gas use by U.S. methanol producers.
Just over a decade ago, U.S. oil and natural gas production were on the decline and scores of petrochemical plants—including 90% of the nation’s methanol capacity--were being shut down. Now, the only constraints on domestic oil and gas output are prices (they need to be high enough to encourage drilling) and infrastructure (it needs to be sufficient to move product to market). Abundant, inexpensive natural gas has spurred interest in a variety of gas-based chemical production projects, including projects to make ammonia, propylene, and—as we will revisit today—methanol.
A three-step process is used to produce methanol from natural gas. (No angst please; we’ve really simplified things for our organic chemistry-phobic readers). First, a steam-methane reformer (SMR) converts natural gas into a synthesis gas (syngas) consisting of carbon monoxide, carbon dioxide, water and hydrogen. Next, hydrogen is stripped from the syngas, and third, methanol is produced through a catalytic synthesis of the syngas.
As we said a while back, about two-thirds of worldwide methanol demand (recently estimated by Methanex, the leading methanol producer, at 61 million metric tons per annum, or MTPA) is tied to its traditional use a basic chemical feedstock for making formaldehyde, acetic acid and petrochemical intermediates that, in turn, are used to make plastics, synthetic fibers, paints, resins, solvents and the like. The balance of methanol produced annually is used in “methanol-to-olefins” (MTO) plants (most of them in China) that directly convert methanol into ethylene or polyethylene; as a fuel (again, mostly in China); or as a fuel additive (it can be used to produce dimethyl ether (DME), an alternative motor fuel and sometimes replacement for propane, and to make methyl-tertiary-butyl ether (MTBE), an octane booster the U.S. has banned for domestic use but still produces for export).
Methanol’s fastest-growing use has been in MTO plants (China now has 10 such plants, which at full capacity can consume a total of 10 metric tons per annum, or MTPA) and as a fuel; it’s been estimated that by the 2020s worldwide methanol demand may top 100 MTPA or 40 MTPA above the current level – representing about 7% per year growth.