Over the last few weeks, natural gas and and electricity prices experienced a small downward trend. However, that short trend ended this week. For this seven day report period, the 12-month average price for natural gas at the Henry Hub well-head rose 3.5%. The 12-month average price for peak power on the PJM rose 1.3%.
Natural gas and electricity prices floated down over during the past few weeks because there was minimal energy demand for heating or cooling. However, this week a heat wave hit and placed upward pressure on energy prices. Locally, we hit our first 90 degree day of the season and more 90 degree days are predicted for next week. In fact, the 8-14 day forecast calls for above average temperatures east of Mississippi. As temperatures rise, power plants burn more energy in an effort to produce the extra electricity that is needed to run the air conditioners. This increased demand for energy places upward pressure on energy prices.
Summer temperatures and the summer hurricane season are two of the biggest variables to watch over the next few months. However, for now, the good news is that natural gas and electricity prices are both near a seven year low.