In last Friday's Energy Update, we noted that natural gas prices on the NYMEX rose 4.5% and electricity prices on the PJM rose 2.8% . Those price increases were caused by the formation of Tropical Storm Lee in the Gulf of Mexico. However, for this seven day report period, the 12 month average price for natural gas on the NYMEX fell 4.3% and the 12 month average price for peak power on the PJM fell 1%.
Prices fell this week as the market place realized that Tropical Storm Lee, Hurricane Irene and Hurricane Nate would have very little impact on the supplies coming out of the Gulf of Mexico. In fact, these recent storms actually placed downward pressure on prices. Rather than disrupting supplies and causing price spikes, these recent storms actually cooled down temperatures in much of the country and dampened the country's energy demands.
Another factor that may have placed downward pressure on energy prices this week was the news that the economy was still operating in a slow growth mode. A lethargic economy normally places downward pressure on energy prices.
There are many unpredictable variables that impact energy prices. The good news, for now, is that energy prices are still a bargain relative to the last seven years. (Please see the energy graphs included in this newsletter to see how today's prices compare to the last seven years.) Please call your account manager if you want to see if an early renewal strategy can save you money.