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 MoreIt 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 MoreAs 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 MoreWhat 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 MoreLate 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 MoreWhat 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 MoreOver 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 MoreMarkets 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 MoreOn 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…
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