Energy Price Outlook
When creating an electricity price outlook energy marketers focus on the price of natural gas. The reason is that over the last two decades almost all of the new power generation put in place has been natural gas fueled. Natural gas now accounts for over 40% of the electric generation in New England. That said the outlook for natural gas prices is dependent upon economic growth, supply and weather.
In July there was speculation on whether the economy was on a path of sustained growth...well the results are in and while the economy is not in decline it sure doesn't feel like growth. Expectations are for the economy to continue to grow. Investors are showing confidence as the Dow Jones average has resurrected from sub 10,000 level in July to over 11,000 in October. No one, though, will feel comfortable until the employment numbers also start to improve.
The amount of natural gas storage remains near the five year high, due to weak demand and suppliers that have expanded production ahead of the economic recovery. To give you a feel how much natural gas production has expanded the number of natural gas rigs in production is 63% ahead of last year.
So far so good! While hurricanes this year have not yet affected the natural gas production areas of the Gulf of Mexico, we are still in the heart of the hurricane season. October is also the time of year when natural gas retail suppliers need to complete their purchases for the upcoming winter. It is typical to see natural gas prices rise during the course of October.
A weak economy, a lack of weather in the Gulf of Mexico and the increase in production is great news for energy buyers. Call Howell Energy Consulting to create a plan to take advantage of the low prices in the market.
|About Derek Howell
With over 30 years in the energy industry and 12 years of experience in the deregulated energy business, Derek Howell's expertise covers the broad expanse of the electricity and natural gas markets.
Prior to the founding of Howell Energy Consulting. Mr. Howell was Direct Energy's Director of Retail Pricing for Direct's New England and New York regions.