Energy Prices Creep Up For the Second Consecutive Week
Week in review for period of March 18-24, 2011
Spring officially arrived last Sunday, March 20, 2011. However, old man winter is not leaving without a fight. The short term forecast calls for colder than normal temperatures east of the Mississippi for the next six days. This cold forecast and the continued unrest in the Middle East placed some upward pressure on energy prices during this seven day period. This is the second consecutive week of price increases. For this report period, natural gas prices rose 2% and electricity prices were actually flat. Crude oil rose 4%, closing at $105/barrel. Colder than normal temperatures and unrest in the Middle East almost always places upward pressure on energy prices.
Going forward, here are some other variables to watch. Natural gas inventories, for now, are still above the five year average. Plus, energy production is very robust thanks to the discovery of shale gas. However, it is interesting to note that the gas rig count has decreased by 8% and is now at its lowest level in more than a year. Additionally, the government is discussing a plan to place more regulations on the shale gas drillers in Maryland and Pennsylvania. Will these new regulations and the drop in the rig count disrupt the supply picture?
Natural gas and electricity prices are still near a seven year low. Thus, this is a good time to review your early renewal strategy with your WGES account manager.
WGES is helping customers meet the D.C. Green Power Community Challenge.
On March 18th the District of Columbia was recognized as the nation's leading EPA Green Power Community. District Government, businesses, institutions, and residents are collectively purchasing nearly 756 million kilowatt-hours (kWh) of green power annually – enough green power to meet 8 percent of the community's total electricity use. As a first step in becoming a Green Power Community, the D.C. government began purchasing 50 percent CleanStepsSM WindPower from WGES for its municipal operations in 2010. The DowntownDC Business Improvement District is one of a number of partners in the Green Power Community that recently signed up with WGES to purchase 100 percent CleanStepsSM WindPower at its headquarters facility on New York Avenue in Northwest, D.C.
District leaders are encouraging residents, businesses and organizations citywide to make the switch to green power, challenging the city to increase green power purchases by 33% by August 31. Green Power Communities are cities, towns, and villages where the local government, businesses, and residents all commit to buy green power in amounts that meet or exceed EPA's Green Power Community purchase requirements.
The combined green power purchasing of residents and organizations in D.C. is equivalent to avoiding the carbon dioxide (CO2) emissions of 102,000 passenger vehicles per year, or the electricity needed to power 65,000 average American homes annually.
To learn how your business can participate in D.C.’s Green Power Community Challenge, contact your Account Manager or call (703) 793-7348. Also, view the video below, featuring interviews with D.C. officials, residents, business owners, and WGES President Harry Warren.
Video courtesy of the District of Columbia Department of the Environment.
EIA Gas Storage Update - Data Released March 24, 2011
Total Lower 48
Storage Update: The net withdrawal of 6 Bcf met expectations this week. The 5 year average withdrawal for this time of year was 17 Bcf. Last year at this time we experienced a 7 Bcf injection. This week's withdrawal eliminated the gas surplus from a year ago. Inventories are now 1% below last year's levels. However, we are 2% above the 5 year average. The traditional withdrawal season ends March 31, 2011. Here is the big question: Where will inventories be at the end of March? Will inventories be below or above the 5 year average? Stay tuned.
Weekly Drilling Rig Update: Active rig count released by Baker and Hughes for the week ending 3/18/11 was 875 rigs. This was a decrease of 7 rigs from the previous week. The count is 64 lower than the count reported this same week last year. We are 28% below the 5 year average rig count of 1,223. This is the lowest rig count in over a year.
* Heating degree days are calculated by comparing the day’s average temperature to a 65 degree baseline. If the day’s average temperature is above 65, there are no heating degree days that day. If the day’s average temperature is less than 65 degrees, subtract the day’s average temperature from 65 to find the number of heating degree days for that day.
Natural gas-a colorless, odorless, gaseous hydrocarbon-may be stored in a number of different ways. It is most commonly held in inventory underground under pressure in three types of facilities. These are: (1) depleted reservoirs in oil and/or gas fields, (2) aquifers, and (3) salt cavern formations.
Two of the most important characteristics of an underground storage reservoir are its capacity to hold natural gas for future use and the rate at which gas inventory can be withdrawn.
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