WJR recently asked Jay Young to come on the air in Detroit, MI to discuss the rising energy costs of heating homes and buildings in the United States. Wholesale natural gas prices were up almost 50% from the year prior back in 2021. The reason behind the increase is still contested by people within the industry. Young says that it has to do with a lower supply of natural gas, which is about to decrease even more, while some argue that it’s because of colder weather being colder now, and people are using more gas to heat their homes.
Although there are talks of reducing the reliance on fossil fuels and moving towards renewable energy, it’s not yet practical as it is not providing enough energy. Young believes it’s going to take time to fill the gap and that the overall demand for oil in the United States is going to keep going for the next five to ten years. Young also wrote a book about The Upside of Oil and Gas Investing, and in the book, he writes about the supply and demand of natural gas globally.
Young also discussed the current natural gas prices in Europe and China, which are higher than the production costs. Still, the infrastructure is not yet present to transport gas from the U.S. to Europe in large volume, and until then, U.S. natural gas prices will continue to rise, benefiting investors. However, Young is unsure why the White House has chosen to increase exports to Europe while stopping the construction of US gas distribution networks.
In conclusion, although countries need to transition to renewable energy sources, the process is not yet complete, and we still need fossil fuels. Young believes that oil and gas prices will increase in the future, and businesses might want to hedge their options.
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