May 24, 2010

Energy Prices Pull Back

Aside from the disaster in the Gulf, there is very little bad news in the energy world, which is good news for business owners. Electricity users in the Buffalo area saw electricity prices decline to the $35 per MWH levels.  Mild weather, excellent storage and no mad rush for natural gas from the recovering economy all helped to pull natural gas back to the $4.00 per mmbtu level. There is even news that the US and European regulators may be working to better control speculation in crude oil markets through commodity trading reforms on both sides of the Atlantic. The notional value for these derivatives is valued in excess of $200 trillion.
 

On the flip side, Russia is leading a loose group of natural gas producers who are trying to peg natural gas prices to crude oil prices. We saw the disastrous results of this type of "tandem" trading from 2006 to 2008, which was executed by investment firms and hedge funds. Only lemmings would follow the Russians in this march off the cliff.

Natural Gas Storage Rises

Working gas in storage was 2,165 Bcf as of Friday, May 14, 2010, according to EIA estimates. This represents a net increase of 76 Bcf from the previous week. Stocks were 73 Bcf higher than last year at this time and 308 Bcf above the 5-year average of 1,857 Bcf.

Natural Gas Rigs Increase by 18

Baker Hughes reported that natural gas rigs increased by 18 (5/14/10) compared to the previous week. There are 258 more rigs in the field than last year.

DC Politicians Still Ignoring The Benefits of Natural Gas

While the Gulf of Mexico slowly fills with light sweet crude, the Kerry-Lieberman American Power Act (APA) is slowly being debated. Amazingly, the APA overlooks the importance of natural gas as a vehicle for reducing CO2 emissions. Natural gas is the only real-time alternative to oil and coal. Renewables are ten years away from making an impact. The US and Canada combined possess several hundred year's worth of natural gas reserves. Politicians on both sides of the aisle don't seem to understand the magnitude of our natural gas resources. One would hope that the severity of The BP leak clearly demonstrates that an oil-based economy is dangerous fiscally, environmentally and socially. In fact, our import addiction costs us $1 billion a day and drives $100 million a day into the coffers of Iran. The new age of energy will be built on natural gas produced from land-based rigs. By emphasizing natural gas use, the US can dramatically reduce its CO2 emissions, cut its export deficit and provide a significant percentage of its energy needs drilled from safer, land-based rigs.

Natural Gas Market Watch- Intraday Prices Snapshot

Here are the intraday prices on the CMEG/NYMEX electronic market today (Monday) at 11:44 AM for the next six months($ per mmbtu, intraday prices):

Jun. $4.031 -0.004
Jul. $4.088 -0.018
Aug. $4.157 -0.021
Sep. $4.211 -0.030
Oct. $4.654 -0.050
Nov. $4.310 -0.033

Natural Gas Futures:
PMC 30-Day Natural Gas Futures Chart

Crude Watch (Declined 19% in two Weeks)
NYMEX Crude front month future is down $0.03 to $69.96 at 10:44 AM..
 OPEC Basket Data
 
Electricity Watch-
Electricity for all Northeast markets is trending down.
For more information view the Day Ahead Electric pricing data charts from the PMC database, updated every Monday.
 

A Smarter Grid Is Coming To A Utility Near You
It looks like 2010 will be the year that the Smart Grid steps from concept to reality, at least for regional RTO's like NYISO, PJM and ISO-NE. In New York, The New York Independent System Operator (NYISO) announced this past week that an agreement has been executed between  NYISO and the U.S. Department of Energy (DOE) through which the NYISO will receive $37.8 million from DOE to deploy smart grid technologies on New York's power grid.

The federal funds, provided under the Smart Grid Investment Grant (SGIG) program, will support a $75.7 million smart grid project to enhance the reliability and efficiency of the New York State power grid.

In the PJM RTO, 12 transmission owners will use $27.8 million in Federal money to install phasor measurement units in substations in 10 different states (Delaware, Illinois, Indiana, Maryland, Michigan, New Jersey, Ohio, Pennsylvania, Virginia and West Virginia).

In New England, the six states comprising ISO-New England will receive $229 million toward Smart Grid projects including a major power line in Maine.

The so-called "smart grid" technology is designed to allow utilities to more quickly pinpoint areas affected by service outages, and allow customers to monitor their energy consumption and gain some control of expenses by adjusting usage throughout the day. Once the phasor systems are in place, the next step is always the most problematic- educating customers about how to put SmartGrid meters to work for their businesses. The promise of Smart Grid technologies may not be experienced by small business owners until 2012.

Weather Trends-
09-2010.
NOAA Forecast for Next Week
8-14 Day forecast
NOAA Forecast- 30-Days
El Nino-La Nina (Pacific Ocean Temperature Levels)
Arctic Oscillation (Arctic Pressure Patterns)

Written and Researched by Martin Linskey; Energy Charts developed by Charles Myers.

Disclaimer: This information is provided for the use of our customers and potential customers. Power Management Company assumes no responsibility or liability for the accuracy or completeness of pricing or information in this document. Historical data was obtained from sources that we believe to be reliable, but we do not guarantee its accuracy or completeness. It is not intended to provide advice or recommendation. Views are subject to change without notice.