September 19, 2011 

Troubled Economy's Silver Lining? Energy Prices.

As we approach the heating season, we customarily see a gradual increase in key energy commodity prices. This month, we are seeing the opposite with declines across the board, including crude oil. The benefit to business is clear. Energy is typically the second highest operating expense that a business must meet. In an era of tight margins, lower overhead costs can't help but buoy profits. That is so long as the politicians don't add more taxes to our utility bills.

This morning, the front month for natural gas is trading at $3.791 at 10:05 on the CME/NYMEX, down $0.018. As you can see in our Natural Gas Futures chart below, the downtrend started in July and has persisted. The big injection of 87 BCF of natural gas into inventory certainly helped weigh the price down.

Natural Gas Futures Market

The buyer's market for natural gas remains in place. CME-NYMEX natural gas futures market intraday prices for September 19, 2011 at 10:15 AM.
(Prices are USD per mmbtu)

Oct. - $3.791 -$0.018
Nov. - $3.902 -$0.020
Dec. - $4.137 -$0.018
Jan. - $4.274 -$0.016
Feb. - $4.291 -$0.016
Mar. - $4.262-$0.017

PMC 30-Day Natural Gas Futures Chart

Natural Gas Storage Increases by 87 BCF
Working gas in storage was 3,112 Bcf as of Friday, September 9, 2011, according to EIA estimates. This represents a net increase of 87 Bcf from the previous week. Stocks were 140 Bcf less than last year at this time and 52 Bcf below the 5-year average of 3,164 Bcf.

Electricity Prices Continue to Decline

With all of our regional electricity prices dropping to levels at or below $40.00 per MWH levels this morning, we are seeing the continuation of the "energy bonus" that has benefited business and consumers for three years. Today's low electricity prices are the results of a 'shoulder period' arriving two months early, cheap and plentiful natural gas and slightly below average demand. A shoulder period is the period between either a heating and cooling season; or a cooling and heating season. Shoulder months are not loved by utilities due to the lower demand requirements. We may have a shoulder period of low demand for two more months, which will benefit business operating costs.

Crude Watch

Light Sweet Crude (WTI) is trading today on the CME/NYMEX market at $85.24, down $2.24 at 10:15 AM. Crude is just one of many commodities pulling back today over fears of a decline in US and European economic activity.

 OPEC Basket Data

Interesting Links and Resources

(Click on Links to View)

LNG Prices May Soar 71% This Year  (Bloomberg.com)
Anticipated demand from China and earthquake-ravaged Japan is placing pressure on world prices for liquefied natural gas.

Economic Uncertainty Impacting Commodities  (Bloomberg.com)
Europe's debt crisis may drive down prices for wide range of commodities.

5-Myths of the Solyndra Bailout   (Washington Post)
The WP Blog about the Solyndra collapse busts a few myths and brings a few truths home for our industry, which woefully under funds new innovations.

GE Gas Turbine Business Rebounding (BW)
Utilities continue to place bets on natural gas.

Daniel Yergin WSJ Interview about Energy 2.0 (WSJ Web Video- 20 minutes)
David Wessel interviews Daniel Yergin, Pulitzer-prize-winning author of "The Prize" and the new book "The Quest" which details the current state of energy.

Two Over The Horizon Energy Innovations

1. Ampenergo's Cold Fusion Renaissance

If the words Pons and Fleischman remind you of two discredited cold fusion scientists, you may have to review your opinion. A US company called Ampenergo has purchased the development rights to the "fringe" technology developed by Andrea Rossi who has revived the Pons-Fleischmnan quest for an energy catalyzer that was started over twenty years ago.

The company will test a generator unit the size of a storage container somewhere in the US over the next two months. The mobile generation system is designed to produce 1 MWH of energy from 52 energy catalyzer units. The only apparent waste product is water. Rossi's invention uses hydrogen as a key component of the energy production system. The prototype plan is expected to generate enough steam to generate 1 MWH of energy. The system apparently violates Maxwell's second law of thermodynamics which places it in the category of "fringe" science.

Craig Cassarino, one of Ampenergo's lead investors notes in an interview with NYTEKNIK.com : "As you start to look at various applications that this could be used in, whether it’s space, or for making heating or power plants, each application has its own particular engineering challenges. That’s what we see as the strategic planning and how this industry gets started. Let’s put it this way, if this is done correctly, it has the potential to change the world. You know, everything from carbon in the atmosphere to giving cheap energy to people worldwide that cannot afford to put food on their table." (Source: NyTeknik)

2. New Energies Technologies Solar Windows

In another breakthrough product, New Energies Technologies has created a clear solar window that can generate electricity. The product is called Solar Window. It is based on technology that produces the world’s smallest functional solar cells, which measure less than ¼ the size of a grain of rice, and has been shown to successfully produce electricity. One of the unique benefits of the technology is the low cost of production, which could accelerate the commercial development of the product in LEED facilities. To learn more about the new technology, click here.

Weather Trends
The 6-10 Day and the 8-14 Day National Weather Service Forecasts indicates warmer weather ahead for most of the country with the Southeast experiencing normal to colder than normal temperatures.