Neither Wind, nor rain nor the threat of a hurricane were enough to spike energy prices this week. For this seven-day report period, the average price for natural gas on the NYMEX fell 1%. The 12-month average price for peak power on the PJM fell by less than 1%.
Natural gas and electricity prices have been range bound over the last six weeks. However, this week, we feared that energy prices would spike upward as Hurricane Isaac moved into the Gulf of Mexico. Hurricanes can spook the marketplace and place upward pressure on energy prices. Producers were spooked by this storm. As of August 30, the U.S. Department of Energy reported that 72% of the offshore gas rigs were shut-in and 95% of the offshore oil rigs were shut-in.
The big question is why the natural gas and electricity rates remained relatively flat this week. One thought is that Hurricane Isaac was a category 1 storm and thus would not cause as much damage off-shore as a category 2 or 3 storm.
Another possible reason for flat pricing this week is that less and less natural gas is coming from the offshore rigs in the ocean. In fact, onshore natural gas production from the shale formations now accounts for more than 25% of the United States' gas production.
Natural gas and electricity prices are some of the most volatile commodities in the world. For now, most people are happy to be stuck in today's pricing range which represents a nine-year low.