For this seven day report period, energy prices rose. The 12-month average price for natural gas at the well-head rose 2.2%, and the 12-month average price for peak power on the PJM rose 1%. Natural gas and electricity prices have now increased four out the last five weeks. Perhaps the small price decrease noted in last Friday's Energy Update was an aberration.
Although analysts are quick to point out that natural gas production will remain strong in 2011 thanks to the shale gas discoveries, the bullish variables are getting all the attention and are placing some upward pressure on energy prices for now. For example, some analysts say that relatively low natural gas prices may lead to reduced drilling. Additionally, in the electric generation sector, analyts believe that gas usage will increase as the old coal fired plants are replaced by the clean burning natural gas plants. Then, to top off all ot this, the NAT GAS Act of 2011 is being studied. Mr. T. Boone Pickens and the federal government are looking at ways to create a network of natural gas vehicles and fueling stations that will reduce our dependence on oil.
For now, natural gas and electricity prices are still near a seven year low, but the trend line is creeping upward. Stay tuned. The biggest wild card that can impact near term pricing is on the way. It is called summer.