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Natural Gas Price Drivers

By Avalon Energy Services | Jan 25, 2012 | Comments Off on Natural Gas Price Drivers

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…

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Cape Wind

By Avalon Energy Services | Jan 18, 2012 | Comments Off on Cape Wind

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…

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Best Friends? – Natural Gas and Electricity Prices

By Avalon Energy Services | Jan 11, 2012 | Comments Off on Best Friends? – Natural Gas and Electricity Prices

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. Like natural gas, electricity prices…

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Natural Gas Prices – Looking Ahead

By Avalon Energy Services | Jan 4, 2012 | Comments Off on Natural Gas Prices – Looking Ahead

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. The forward curve represents the collective thinking of…

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Natural Gas Prices – Get Real

By Avalon Energy Services | Dec 29, 2011 | Comments Off on Natural Gas Prices – Get Real

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…

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Time to Convert

By Avalon Energy Services | Dec 23, 2011 | Comments Off on Time to Convert

Like crude oil prices, fuel oil prices have risen dramatically (click here for more information). The above graph 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 distillate of crude oil…

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Crude Oil and Natural Gas Get a Divorce

By Avalon Energy Services | Dec 16, 2011 | Comments Off on Crude Oil and Natural Gas Get a Divorce

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…

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“Energy Prices Always Go Up”

By Avalon Energy Services | Dec 10, 2011 | Comments Off on “Energy Prices Always Go Up”

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)…

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Earthquake!

By Avalon Energy Services | Aug 24, 2011 | Comments Off on Earthquake!

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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