Natural gas prices fell slightly for the third consecutive week while electricity prices broke ranks and inched upward. For this seven day report period, the 12-month average price for natural gas at the well-head fell 1.7%. The 12-month average price for peak power on the PJM rose a meager .7%.
Natural gas and electricity prices have floated down over the last few weeks because there was minimal demand for heating or cooling. But prices were up prior to this recent downward trend. If you look at the pricing graphs in this newsletter, you will see that prices are range bound as they continue to hover around this seven year low. Over the last year, natural gas and electricity prices have gone up slightly one week and dropped slightly the next week. Prices are low because natural gas supplies are abundant (thanks to the shale gas discoveries) and energy demand is low for now. However, there are some things on the horizon that could place upward pressure on prices. Here are some things to watch. After the next five days, warmer than normal temperatures are expected east of the Mississippi. Hot weather creates high demand for energy. Additionally, gas supply shut-ins in the Gulf of Mexico due to the Mississippi flooding or future hurricanes could place upward pressure on prices. Lastly, a strong economic recovery could begin to place upward pressure on prices.
The good news, for now, is that prices are still near a seven year low.