Whew. We made it! 2020 is finally in the rear-view mirror. And with the New Year, it’s time for the annual Top 10 Energy Prognostications blog, our long-standing RBN tradition where we lay out the most important developments we see for the year ahead. Unlike many forecasters, we also look back to see how we did with our predictions the previous year. That’s right! We actually check our work. Usually we roll our look back and prognostications for the upcoming year into a single blog. But after the mayhem of 2020, and considering how that upheaval has changed the landscape for 2021, this time around we are splitting our prognostications into two pieces. Monday’s blog will look into the RBN crystal ball one more time to see what 2021 has in store for energy markets. But today we look back. Back to what we posted on January 2, 2020.
Let’s get this out of the way up front. We did not forecast a global pandemic. Nor any of the maladies that came along with it. Sure, we heard about a mysterious coronavirus in Wuhan, China, a year ago, but like most everyone we assumed that it was just another isolated virus in a distant country that would soon be contained. Wrong. Very Wrong. Consequently, we did have a few significant misses in our last round of prognostications. But in the big scheme of life in 2020, we did OK.
So here’s our 2020 Prognostications report card. Like all good New Year’s Top 10 lists, we’ll start at #10 and work our way down to #1.
- The price of natural gas has a fundamental problem. It’s crude oil. Back in 2019, 80% of the growth in natural gas production was coming from associated gas (from wells that predominantly produce crude oil), and thus insensitive to low gas prices. So an oversupply of natural gas from crude wells was hammering natural gas prices, a trend we projected would continue into 2020. Turns out gas prices did stay low, averaging only $2.12/MMBtu for all of 2020 and sinking below $1.50/MMBtu for a few days in June. But there were a lot more things going on other than growth in associated gas that weighed down gas prices last year, including #9 just below.
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