How low can natural gas prices go? We may find out soon. First some background. US natural gas demand varies considerably over the course of a year, driven primarily by natural gas usage related to heating. During peak winter months, natural gas demand exceeds the production capacity of North American natural gas wells. Natural gas [...]
We have noted previously on this blog that natural gas prices have declined dramatically over the last three years. On January 19, 2012 the February futures contract settled at $2.32 per million Btus. This is lower than natural gas prices have been in a decade and we are in the winter heating season, a time [...]
It was recently reported that a power purchase agreement between National Grid and Cape Wind was approved by the Massachusetts Supreme Judicial Court. National Grid is committed to purchasing half of the output of the project at a starting price of 18.7 cents per kilowatt-hour. This price will then escalate 3.5% per year for 15 [...]
We have looked at historical and forward natural gas prices. How have electricity prices been behaving? The graph above shows the monthly average of electricity prices at PJM West (a trading hub where electric generation is concentrated) spanning the 131 month period of time of January 2001 through November 2011. [Click on graph to enlarge]. [...]
We have looked extensively at historical natural gas prices, both nominal and real. What does the market tell us about where natural gas prices may be headed in the future? The above graph shows the monthly “forward curve” for natural gas at four different points in time. [Click to enlarge the graph.] The forward curve [...]
Previous articles on the topic of natural gas prices have looked at natural gas prices spanning the 179 month period of time running from January 1997 through November 2011 (click here, here, and here for more information). Here is a graph of the dataset. Each time we have used this graph, we have noted that [...]
Like crude oil prices, fuel oil prices have risen dramatically (click here for more information). The above graph (click graph to enlarge) shows the monthly average spot price history of #2 fuel oil delivered to New York Harbor. The prices shown date back to June 1986 and run through November 2011. Fuel oil is a [...]
As discussed previously on this blog, natural gas and electricity prices in the wholesale markets have declined precipitously (click here for more information). What is more obvious, certainly at the gasoline pump, is that crude oil prices, unlike natural gas prices, have been on an upward trend. The above graphs show (i) the monthly average [...]
There is a common perception that energy prices have been, and continue to be, on a one way path upwards. Is this the case? No. The graph above provides a historical view of natural gas prices. Plotted are the monthly average spot prices of natural gas at Henry Hub (a trading hub in Southern Louisiana) [...]
Wholesale electricity prices are volatile. Because electricity cannot be stored in any meaningful quantity, electricity load (demand) and supply must be matched in real-time. Matching load and demand is the challenging job of grid operators. To give you an idea of how volatile prices can be, take a look at the graph below (source: pjm.com). [...]
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