Cold temperatures in most of the country are keeping upward pressure on energy prices. For the fifth week in a row, energy prices rose. For this seven day report period, the average 12-month price for natural gas on the New York Mercantile Exchange (NYMEX) rose 4% and the 12-month average price for peak power on the PJM rose 1.9%.
Since November 8, 2013 natural gas prices on NYMEX have risen 16.5% and electricity prices on the PJM have risen 4.4 %. Analysts blame the price increases on the arrival of unseasonably cold temperatures. As you may recall, November was 17% colder than normal, and December temperatures so far seem to be continuing that trend.
These unusually cold temperatures are creating havoc for natural gas production all over the country. In fact, according to the Energy Information Administration (EIA), "U.S. gas production decreased 3.3% this week following well-freeze-offs. Wide-spread freeze-offs occurred in the Piceance Basin in Utah and Wyoming, the Uinta Basin in Utah, the San Joaquin Basin in California, and the Williston Basin in North Dakota." The closing of these gas wells placed additional upward pressure on energy prices this week.
Stay tuned. Weather is, undoubtedly, the main factor driving prices for the next few months.