Our Blog

Best Friends? – Natural Gas and Electricity Prices – An Update

By Avalon Energy Services | Oct 15, 2012 | Comments Off on Best Friends? – Natural Gas and Electricity Prices – An Update

By David White In a post from January 2012, the declining correlation between the price of natural gas and the price of electricity was explored (click here). At that time, the correlation between the two was declining as a result of the greater recovery in electricity prices relative to those of natural gas. The graphs…

Read More

Time to Draw Down the Strategic Petroleum Reserve? – Part 2

By Avalon Energy Services | Oct 5, 2012 | Comments Off on Time to Draw Down the Strategic Petroleum Reserve? – Part 2

It has been argued that there is too much crude oil in the Strategic Petroleum Reserve and that it should be drawn down. Arguments have been made that one should “tie the amount of insurance you carry to the size of the need.” By that argument, because domestic production is up and “hit record levels…

Read More

Keystone XL Pipeline – Where’s the Noise?

By Avalon Energy Services | Sep 27, 2012 | Comments Off on Keystone XL Pipeline – Where’s the Noise?

As the author notes below, on September 5, 2012, TransCanada (NYSE: TRP), the Canadian energy company hoping to build the controversial Keystone XL pipeline, submitted its final re-routing plan to the Nebraska Department of Environmental Quality (DEQ) and the U.S. State Department. This submission represents the latest step in what has become a more than…

Read More

Time To Draw Down The Strategic Petroleum Reserve?

By Avalon Energy Services | Sep 21, 2012 | Comments Off on Time To Draw Down The Strategic Petroleum Reserve?

What is the Strategic Petroleum Reserve? The Strategic Petroleum Reserve consists of a number of large underground caverns created in naturally occurring salt diapirs (domes) along the Gulf Coast of the United States. The caverns were created by drilling wells into the salt domes, dissolving the salt with water, pumping the salt water solution to…

Read More

What Does a Derecho Look Like?

By Avalon Energy Services | Jul 22, 2012 | Comments Off on What Does a Derecho Look Like?

Late Friday, June 29, 2012 a destructive set of thunderstorms swept through the Mid-Atlantic region. With winds of up to 80 mph, the storms produced extensive damage and left several million utility customers without electricity. The National Weather Service (NWS) refers to this kind of fast-moving, long-lived, large, and violent thunderstorm complex as a “derecho.”…

Read More

What does a warm day look like?

By Avalon Energy Services | Jun 23, 2012 | Comments Off on What does a warm day look like?

What does a warm day look like? Here are several ways of looking at one particularly warm day – June 21, 2012. The blue line on the graph below shows instantaneous electricity demand in PJM (see note 1). Electricity demand ebbed to 88,367 megawatts at 4:25 AM and then began to rise as temperatures in…

Read More

Natural Gas Prices – Time to Hit the Panic Button?

By Avalon Energy Services | May 20, 2012 | Comments Off on Natural Gas Prices – Time to Hit the Panic Button?

Over the last 25 days, the daily spot price of natural gas at the Henry Hub has risen more than 30%. This is a dramatic percentage increase over a short period of time. Is it time to hit the panic button? No. In short, the percentage increase is so large because the base has gotten…

Read More

Long Tailed Fish Swimming East

By Avalon Energy Services | May 6, 2012 | Comments Off on Long Tailed Fish Swimming East

Markets adjust. There are perhaps few better examples of that adage than the crude oil and natural gas markets. One way of looking at how these two markets adjust is through the rotary rig count. Baker Hughes keeps track of the number of active drilling rigs in the US (and also internationally). Since July 1987,…

Read More

Crude Oil and Natural Gas Move to Different Hemispheres

By Avalon Energy Services | Apr 17, 2012 | Comments Off on Crude Oil and Natural Gas Move to Different Hemispheres

On December 16, 2011, we looked at the relationship between natural gas and crude oil prices (see “Crude Oil and Natural Gas Get a Divorce” here). We looked at how historically, on an energy equivalent basis ($/mmBtu), crude oil (West Texas Intermediate at Cushing, Oklahoma) traded at about a 50% premium to natural gas at…

Read More