Washington Gas Energy Services: A Washington Gas Affiliate Complany
Volume 11, Issue 25
We Know Energy
June 21, 2013 Energy Update
In this Issue
Editor's Note
Supply Versus Demand
Natural Gas Fundamentals
Natural Gas Storage: Another Above-Average Injection. Data Released June 20, 2013
Rig Count for Natural Gas
NYMEX Natural Gas Monthly Settlements for the Past 12 Months
NYMEX Values per Month for the Forward 12 Months
NYMEX Graph for Natural Gas - 12 Month Average Price per Therm at the Louisiana Well-Head
PJM Electricity
PJM Graph for Electricity - 12 Month Average Peak Power Price
Weather
Local Cooling Degree Days*
Recent Features
WGES Selected to Provide Groundswell 100 Percent Wind Power for its Community Power Program Bid (May 24, 2013)


 


WGES Presents $88,000 to Chesapeake Bay Foundation at Annual Earth Day Tree Planting (April 26, 2013)


 


Washington, D.C.’s Union Station Now Powered by 100 Percent Wind Energy Provided by WGES (April 12, 2013)


 


New Contract with WGES Helps D.C. Retain Position as the Nation’s #1 Green Power Community (March 8, 2013)


 


WGES and Sterling Planet Renew Unique Partnership and CleanSteps® Carbon Offsets Agreement (March 1, 2013)


 


Our Wind Power Partners
Green Power Leadership Award Winner - U.S. Department of Energy


Visit wges.com/partners for full list of WGES Wind Power Partners.

 
To find out more about a green power purchase for your organization, call 703-793-7578, or visit wges.com/commercialwind.

For more information, contact your WGES Account Manager or wges_lgc@wges.com.
Editor's Note
Supply Versus Demand
Week in Review for June 14-20, 2013

For a second week in a row, there were no news stories big enough to spook the energy markets. In last week's newsletter, natural gas and electricity prices were relatively flat. This week, we saw more of the same as natural gas prices only rose 1% and the average price for peak power on the PJM rose less than 1%.

Since it is a slow news week, this is a good time to discuss a couple of supply and demand components that are looming in the background. These components can definitely impact energy prices .

On the supply side, the natural gas production numbers look great. According to the U.S. Energy Information Administration (EIA) reports, producers in the United States are now pumping approximately 82 Bcf per day into the distribution system as compared to approximately 67 Bcf per day in March 2005. Gas production is 22% greater than 2005.

The majority of the new production is coming from the shale gas discoveries. Shale gas now accounts for approximately 34% of our country's total natural gas production and is expected to grow to 50% by 2040. These robust production numbers are a big reason that both natural gas and electricity prices are trading at today's low levels. (Please see the graph section of this issue for the nine year trend line of energy prices.)

However, on the demand side, the background news is more concerning. Natural gas consumption is rising in both the industrial and the power generation sectors.

In the industrial sector, EIA reports that "natural gas use for industrial purposes was more than 3% greater during the first five months of 2013 compared to the same period in 2012." Industrial users are slowly switching to natural gas at their plants because gas prices are low relative to other fuels. In 2012, industrial users accounted for 28% of the gas consumed in our country. If industrial demand continues to grow, we may see some upward pressure on energy prices in the future.

In the power generation sector, 36% of the natural gas produced in 2012 was consumed by the electric generations plants. The demand for natural gas from this sector is expected to grow over the next 30 years. Natural gas is cleaner than coal, power plants that burn natural gas are less expensive to build than the coal-burning plants, and natural gas prices at today's levels are low relative to coal. If demand from the power generation sector continues to grow, we may see more upward pressure on energy prices in the future.

For now, supply seems to be greater than demand. As a result, prices for both natural gas and electricity prices are trading near their second lowest level in nine years. This may be a favorable time to look at an early renewal strategy.

Heads up. Today is the official start of summer. As we all know, a brutally hot summer or an active hurricane season can generate the type of news that causes price spikes in energy markets.

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