Energy prices rose again this week. For this seven-day report period the average 12-month price for natural gas on the NYMEX rose 4.7% and the 12-month average price for peak power on the PJM rose 2.1%. From September 7 to October 11, 2012 natural gas prices have risen 17.4% and electricity prices have risen 8.1%.
Weather is the fundamental variable that appears to get credit for this week's price spike. According to BENTEK Energy, natural gas consumption this week was 5.9% higher than the previous week. This increased demand was primarily attributed to the fact that people were turning on their space heaters this week. As energy demand rises, energy prices tend to follow.
Who uses natural gas for space heating? According to the U.S. Energy Information Administration, "natural gas is the most widely used source for household space heating, with 58.3 million homes relying on natural gas heating, while 43.8 million homes heat with electricity, 7.2 million heating with oil, 5.7 million with propane, and 2.5 million with wood. "
For now, the market is focused on the fact that winter demand is on the way. However, it will be interesting to see what happens next week as the six-to-10-day forecast calls for warmer-than-normal temperatures in the northeastern United States.