Thursday, September 01, 2011

Lies, Damn Lies, and Charts Without Context

This is fascinating, and is a great lesson in creating or just plain reading charts.   Lots of buzz over a piece put out by the uber data wonks at the Energy Information Administration under the headline: Pennsylvania drives Northeast natural gas production growth.  You just knew folks would obsess over that.  The echo came first I think via NPR's new Stateimpact site, but spread at least to places like the PG's Pipeline, and of course was picked up by the Marcellus Shale Coalition and others by now I am sure.

As best I can tell, few bothered to read what the EIA had to say as much as obsess on this one graphic they put out there.

So you look at that chart and say OMG, look at all the net new natural gas is coming online!   You have to believe that the storage capacity of the US is filling up quick and what I would really like to hear with winter approaching is that the price of natural gas must be collapsing. Soon they will be giving away the stuff.  It's not like there has been enough time for any meaningful new demand to soak up all that new gas production.  Still a long way from fleets of natural gas cars on the roads and we have made it past the peak energy demand of the summer. 

Of course, it isn't the case just yet.  Natural gas prices are relatively low, but have been stable for much of the last year or so.  Natural gas in storage is not too far from normal parameters.  So what gives?

If you looked at that graphic too quickly.. or didn't bother to look into the context more you might have assumed that the graphic depicted all US natural gas production.  Go look again, it clearly says it is just for Northeast production.  Remember also that natrual gas is shipped around the country in pipelines so it really is a national, or probably best described as a continental market with the entire Northeast not exactly a big part of the production story.  So it is the supply and demand cumulative across North America that really impacts the market prices. 

Just for fun, here is a bar chart I made quickly of Pennsylvania's natural gas production compared to the United States' production as of June 2011.  You will need to scroll down to get to Pennsylvania's data:

And if you are still reading..  it might be good to go back and read the EIA's (yes, the same EIA that made the first chart) current description of energy resources in Pennsylvania.  In particular scroll down to the subsection titled "Natural Gas".  The state of things as they describe it for Pennsylvania is:

" Natural Gas: Although minor, Pennsylvania’s natural gas production has grown in recent years. The State’s Marcellus shale region, in particular, has experienced markedly increased new development over the past few years. However, compared to Pennsylvania’s total natural gas production, shale gas production remains minimal. "
Note they start out with the description 'minor'.

Clearly the 'minimal' part is changing, but even with the big increases in the last year, Pennsylvania is still far from a big part of total US production and a small fraction of production in Texas. You might not think so reading all the hype.  A few folks I have had conversations with recently really believe Pennsylvania is now, as in already, the biggest natural gas producer in the nation.  Some PR folks out there somewhere really deserve bonuses. 


Anonymous BrianTH said...

I guess that depends on what PR game they are playing. It seems to me they would have avoided some bad press recently if they had gone with a "the impact so far is just a small taste" meme, rather than the "OMG we are the biggest thing evah!" meme.

I guess it doesn't matter as long as you own the Governor, but when that changes, they may come to regret some of the overselling and loss of credibility.

Thursday, September 01, 2011 11:08:00 AM  
Anonymous MH said...

I want to get a gas range, but that really doesn't have much to do with low gas prices as much as it has to do with me wanting the pans to get hot faster.

Thursday, September 01, 2011 12:40:00 PM  
Blogger C. Briem said...

Let me guess, you bought your current range in 1979?

Thursday, September 01, 2011 12:43:00 PM  
Anonymous MH said...

No. We have a mid 90s kitchen that the previous owners put it in. It is a very good range, but electric stoves just don't work as well.

Thursday, September 01, 2011 12:47:00 PM  
Anonymous The Wiz said...

Go gas stove!

Overall shale gas nationwide is 25% which is a large increase in the last ten years. Few people know there are a lot of shale gas plays(over twenty, I think) and many have been developed longer like the Barnett and Haynesville plays, thus they are way ahead of Pa in production. This may have amplified the price impact the Marcellus has had. And a slow economy has also suppressed demand quite a bit, further depressing prices.

What has the gas people excited is that the Marcellus is cheaper to extract and very near the East Coast Metropolii which makes transportation costs minimal.
And the Marcellus is huge by comparison so the impact will be huge. Pa is still in the early stages.

Media coverage tends to focus on the local issues in any news story. And in the Marcellus, they have focused on local issues, thus making it seem like the only new gas development to people that don't follow it more closely. And even if the media ran more stories covering national developments in the gas industry, people would selectively pull out stories of local impact. That is just human nature.

The misconception may be more a function of the media focus and human nature than due to any PR program.

Thursday, September 01, 2011 2:55:00 PM  
Anonymous The Wiz said...

oops This may have amplified the price impact the Marcellus has had. should have been in paragraph 2

Thursday, September 01, 2011 2:57:00 PM  
Anonymous Anonymous said...

MH: one word. Induction cook top. Fast. Very fast.

Thursday, September 01, 2011 11:03:00 PM  
Blogger C. Briem said...

Gotta love Maxwell's Equations

Thursday, September 01, 2011 11:14:00 PM  
Anonymous MH said...

I'm not sure what an induction cooktop is, but I don't really want to cook fast. I want the pan to get hot fast so I can start cooking quicker.

Friday, September 02, 2011 9:33:00 AM  

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