Energy prices rose for the second straight week. As a result, natural gas and electricity prices have now risen five out of the past six weeks. For this seven day report period, the 12-month average price for natural gas at the well-head rose 3.5%, and the 12-month average price for peak power on the PJM rose 2.6%. Crude oil prices rose from $108 to $111 per barrel.
This week's story line looks similar to last week. Natural gas production is robust thanks to the shale gas discovery. However, the bullish variables continue to dominate the market and are placing upward pressure on energy prices for now. For example, although shale gas production is booming, analysts are awaiting the results from an EPA study that is looking at the impact of shale drilling on our water resources. A negative report could slow down the shale gas play. Additionally, in the electric generation sector, analysts indicate that natural gas demand will increase as the old coal fired plants are replaced by the clean burning natural gas plants.
Here is the good news: Even with the recent price increases, natural gas prices are near a seven year low and electricity prices are near the six year low. The bad news is that the trend line continues to creep upward.