Low Natural Gas Working Storage a Likely Leading Indicator for Higher Electricity Pricess

Updated March 26th, 2014

Good EIA report on gas prices and gas supply here.

Natural gas use has continued to rise.

US natural gas consumption

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While reserve storage is at near record lows.

Underground storage

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This seems almost certain to drive prices higher and in fact, already is:

Henry hub feb

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And since Massachusetts gets about 50% of our electricity from natural gas, our electric rates seem certain to rise along with them.

This graphic shows the high percentage of Massachusetts electricity that is generated using natural gas.  If gas prices rise then electricity prices will typically follow:   Massachusetts Fuel Mix

This graphic shows that the reservoirs that store gas for the winter are at record lows.  The summer will be spent both providing the usual consumption and recharging the reservoirs.  This will put ongoing pressure on the supplies keeping prices elevated: Lower 48 Underground Storage Graph

Storage Compared to the AverageThe graph above shows how unusual this year really is.

As expected, gas prices are beginning to respond as it becomes clear that this transient event is going to keep demand elevated: Spot Price for Gas

This graphic gives a sense of just how unusual things are this year.

http://www.financialsense.com/contributors/robert-rapier/natural-gas-inventories-headed-toward-zero

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This entry was posted in Fossil Fuel, Fossil Fuel Depletion, Storage and tagged , . Bookmark the permalink.

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