Natural Gas Prices Continue Their Downward Spiral

We’ve hesitated to recommend switching gas suppliers for a few years now based on not knowing when gas  prices hit bottom. This article from Bloomberg tells the story:

February 18, 2016 — 9:15 AM EST Updated on February 18, 2016 — 2:39 PM EST

Stockpiles were 25.8% above five-year average as of Feb. 12
Mild weather seen in lower 48 states through early March

The heftiest U.S. natural gas surplus in four years is getting bigger by the week, pushing prices to the lowest level since December.

government chart on gas stockpile

Natural Gas Stockpile Statistics

Stockpiles were 25.8 percent above the five-year average in the seven days ended Feb. 12, compared with 23.4 percent in the prior period, government data released Thursday showed. The glut has expanded for three straight weeks.


Mild winter weather is limiting heating demand for gas, sending prices down about 20 percent this year and expanding the biggest inventory surplus since 2012. Unless late-season cold erodes stockpiles, oversupply will linger into the second half of the year, pressuring futures lower.

“The bulls have been waiting for demand to turn around and eat into this giant storage glut, but it doesn’t look like that’s going to happen,” said Aaron Calder, an analyst at Gelber & Associates in Houston.

Natural gas for March delivery fell 9 cents, or 4.6 percent, to $1.852 per million British thermal units on the New York Mercantile Exchange, the lowest settlement since Dec. 18.

No deep freeze is forecast for the lower 48 states through early March, according to Commodity Weather Group LLC. Stockpiles dropped 158 billion cubic feet last week to 2.706 trillion, compared with the five-year average withdrawal of 170 billion, Energy Information Administration data show.

“Stockpiles are more than 20 percent above the five-year average now, and it’s only going to get uglier,” said John Kilduff, a partner at Again Capital LLC in New York. “The weather forecasts are getting worse and worse for the bulls.”

Well it still makes sense to stick with the local utility company as those rates are variable and will continue to drop with the market. With summer around the corner, rates should go even lower as usage declines. Perhaps in the heat of the summer it may pay to check into what fixed rates are being offered in order to lock into some low prices for a few years.


Gas Price Outlook For 2016

I was actually surprised that this article didn’t say anything about the need for gas to replace electricity generation as many coal plants go offline. Also, with the potential for a new president approving the Keystone pipeline, that would certainly have some bearing on the gas price outlook.

gas being used for heat

Will LNG exports and globalization impact U.S. natural gas price forecast?

The answer to the above question is yes, so let’s look at exactly how that will happen.

The Evolving LNG Market

There’s been a dramatic increase in LNG exports between 2004 to 2014. The increase has led to a much more bearish outlook for gas compared to that of oil so it’s a buyer’s market. Australia should become the largest LNG producer in the years to come while the U.S. should become the 3rd largest.

The Impact on U.S. Natural Gas Prices

According to Francisco Blanch, head of commodities research at Bank of America Corp, “Connecting U.S. natural gas prices, could result in wider spreads at home.” He goes on to say that the “futures for January 2017 are already trading at a 35.7 cent premium to that of January 2017 futures, which is the biggest spread since 2012.”

In May of 2012 the New York Mercantile Exchange (NYMEX) settlement rate is that of where prices are trading currently, and by the end of 2012 the NYMEX settlement rate closed in the $3.35 range. Decreased production and a hot summer were the key influences why prices rebounded late in 2012.

Will the rest of 2016 be a carbon copy of 2012?

Personally, I think natural gas prices will go up in 2016. The biggest drivers in price will be the U.S.’s LNG exports finally moving forward and an expected hotter summer this year. [4] We should focus on how much LNG exports impact our prices at home, and we all know that higher demand increases prices. Thus the question for the natural gas price forecast becomes, just how much will prices go up?

Read the entire article at:


The Economist-Natural Gas “Step on it” January 30, 2016 from the print edition,

Bloomberg “Gas Prices Will Be Affected by LNG Exports” July 30, 2015

U.S. Energy Information Administration,

NOAA, Climate Forecasts- Jul-Aug-Sep 2016

I think that trying to determine the gas price outlook from the information provided and otherwise available is a very mixed message.


Electricity Prices Skyrocket

Obama Delivers on Promise to Make Electricity Prices Skyrocket

This story and video were published in reporting on electricity prices released by the Bureau of Labor Statistics:

Thursday, April 17, 2014

Millions of Americans are dealing with skyrocketing electricity prices and it  looks like costs will be going even higher.

The average price for a kilowatthour (KWH) of electricity hit a March record  of 13.5 cents, according data released yesterday by the Bureau of Labor  Statistics. That was up about 5.5 percent from 12.8 cents per KWH in March  2013.

The relative price of electricity in the United States tends to rise in  spring, peak in summer, and decline in fall. Last year, after the price of a KWH  averaged 12.8 cents in March, it rose to an all-time high of 13.7 cents in June,  July, August and September.

If the prevailing trend holds, the average price of a KWH would hit a new  record this summer.

Read the rest of this Patriot Update article here:

Read the rest of this Patriot Update article here:

Each year and every month that goes by, the rates just go higher. Flat rates can be locked in for as long as five years and the sooner a company switches away from their incumbent utility, the more money will be saved both short and long term.


Harsh Winter Exposes Volatility in Energy Prices

With the kind of winter that we had and more and more coal firing plants being converted to gas, energy prices have nowhere to go but higher.

Yahoo ran the following story today:


POWER: Approximately 60% of middle market energy executives  believe electricity prices will rise over the next 18 months. Nearly  three out of four executives (72%) see
higher power prices through 2019. Full article in Yahoo Finance

energy prices

This winter has provided a stark reminder to those who manage energy. It’s now clear that natural gas and electricity prices remain volatile.

The early start to winter and prolonged bitter cold have depleted natural gas storage inventories concerning traders and affecting the market as much as 5-10% in a single day.

This winter may be harsh, but your energy bills don’t have to be. Don’t get caught as one those companies who passed on good opportunities hoping for even lower rates.

To put this into perspective, let’s take a look at the recently expired February 2014 NYMEX natural gas futures contract.   In November 2013 the contract traded as low as $3.46/Dth. On its last day of trading, January 29, it had risen 65% to a high of $5.72/Dth and ultimately expired at $5.557/Dth.  That was the highest expiration price for a NYMEX natural gas contract in 50 months.

commercial gas prices


For the past two years, companies have been cautioned that a day of reckoning would be coming as the nation continues to retire coal fired generation and put increased demand on natural gas usage.   The increase in shale gas production from fracking has been a great mitigating factor in limiting the price run up this year.

End-users who purchased natural gas on a monthly variable basis have enjoyed low stable prices for a few years now, but in the past several months, natural gas bills doubled from last year and tripled from the lows set in 2012.

Moreover, the pain has not been confined to natural gas consumers.  With so much electricity coming from gas-fired power plants, electricity prices have soared as well.  Customers who could have locked-in fixed rates months ago near 5 cents/kWh are now reportedly paying variable rates of 10-20 cents/kWh depending on their region of the country.

All businesses and non-profit organizations in deregulated states can lock-in rates before thay go even higher. A qualified energy consultant can do all the work necessary to save money in the future and possibly cut your current energy prices.


Coal Shutdowns to Effect Commercial Energy Prices

The U.S. Energy Information Administration recently released this information regarding the closing of coal fired electricity generation. This will certainly have an adverse effect on commercial energy prices.

Planned coal-fired power plant retirements continue to increase


The need to comply with the Environmental Protection Agency’s (EPA) Mercury and Air Toxics Standards (MATS) regulations together with weak electricity demand growth and continued competition from generators fueled by natural gas have recently led several power producers to announce plans to retire coal-fired facilities.

Between 2012 and 2020, about 60 gigawatts of coal-fired capacity is projected to retire in the AEO2014 Reference case, which assumes implementation of the MATS standards, as well as other existing laws and regulations. The recently announced 5.4 gigawatts of retirements reflect particular strategies of coal plant operators and provide a view of some key drivers in coal plant retirement decisions.

Tennessee Valley Authority. On November 14, 2013, the Tennessee Valley Authority (TVA) announced that it was retiring eight coal-fired units with nearly 3,000 megawatts (MW) of generating capacity. Two units at TVA’s Paradise Fossil Plant (1,230 MW), Unit 8 at the Widows Creek Fossil Plant (465 MW), and all five units at its Colbert Fossil Plant (1,184 MW) are now slated for retirement. The current retirement plans are an addition to TVA’s previously reported retirement plans announced in 2011. TVA officials gave no fixed dates for the planned retirements, but they stated that the units will not operate beyond the MATS implementation date (April 2015).

South Carolina Electric & Gas. South Carolina Electric & Gas (SCEG) announced that it had ceased operations at its Canadys Station generating facility earlier in November. The 295-MW plant’s closing is part of SCEG’s efforts to reduce emissions and to comply with MATS regulations that are scheduled to take effect in 2015. SCEG originally planned to convert the units to natural gas before retiring them in 2018.

Consumers Energy. Consumers Energy (CE) petitioned the Michigan Public Service Commission (MPSC) to approve a bond issue to cover costs pertaining to the closure, decommissioning, and demolition of three coal-fired power plants. The facilities, Units 4 and 5 of the B.C. Cobb Plant (312 MW), Units 7 and 8 of the J.C. Weadock Plant (310 MW), and Units 1, 2, and 3 of the J.R. Whiting Plant (325 MW), would cease operations by April 2016. CE stated that the units would be shut down because the installation of additional emissions controls necessary to achieve compliance with EPA environmental regulations would be uneconomical. It was announced on December 3, 2013, that MPSC had approved the bond issue.

Energy Capital Partners. New Jersey-based Energy Capital Partners (ECP) filed paperwork with the Independent System Operator of New England (ISONE) to close the Brayton Point generating facility in 2017 after it failed to reach a deal on a new power-purchase agreement. Brayton Point currently has agreements with ISONE through May 30, 2016. ISONE voted to reject the retirement of the coal-fired units on December 19, 2013, after which the company stated it would go forward with plans to retire all units. Three of the four Brayton Point generating units, totaling about 1,084 MW, are coal-fired; the remaining 435 MW of generator capacity are powered by oil or natural gas. ECP had just recently finalized the purchase of the 1,520-MW facility from Dominion Resources in September 2013.

Georgia Power. Georgia Power (GP) announced that it planned to file a request with the Georgia Public Service Commission (GPSC) to decertify Unit 3 at its Mitchell generating facility. If approved by the GPSC, GP plans to retire the 155-MW unit before the end of April 2015. GP had proposed to convert the unit to use biomass, but the conversion was determined not to be cost effective.

What does this have to do with electricity and gas prices? The less coal there is to go around, the more gas is used for electricity generation. With gas demand increasing on it’s own (especially with the winter which we just experienced), both gas and electricity prices will certainly head higher. The easiest method to protect your business from commercial energy prices that could be headed into the stratosphere, is to lock in rates today. Flat rate contracts as long as five years are available from multiple energy providers in every deregulated state. Get started saving on energy prices today.

Coal-fired electric generator retirements—announcements since November 2013

Plant / Units Plant Owner State Megawatts (MW)
Paradise / 1-2 Tennessee Valley Authority (TVA) KY 1,230
Widows Creek / 8 TVA AL 465
Colbert / 1-5 TVA AL 1,184
Canadys / 2-3 South Carolina Electric & Gas SC 295
B.C. Cobb / 4-5 Consumers Energy (CE) MI 312
J.C. Weadock / 7-8 CE MI 310
J.R. Whiting / 1-3 CE MI 325
Brayton Point / 1-3 Energy Capital Partners MA 1,084
Mitchell / 3 Georgia Power GA 155
Total: 5,360 (5.4 gigawatts)

Energy Savings

Energy savings will always vary because there are so many variables. Every state has different issues, regulations and suppliers. Every business has different usage amounts, usage patterns and different current rates.

So what are the typical energy savings when you find the best deal?

As an energy consultant, I’ve seen savings vary from the 5% area to the 50% area. If I had to guess an average savings, I’d run with about 15%. Now bare in mind that these saving apply to the generation charges only. Whatever your local utility company is charging for the delivery (which includes billing, maintenance, outage calls, customer services, etc.) will continue to be billed at whatever rate you are currently paying them for these services.

In the natural gas world, I haven’t been able to get rates cheaper than what the client has already had for the past few months. This is due to the depressed prices because of the natural gas glut that we had. Some clients switched however, as they were happy to lock-in a flat rate for three years. Now, the summer of 2013 is a great time to lock-in rates for up to three years due to the conditions oulined in Gas Price Watch.

Electricity is a very different story. I have yet to find a situation where I couldn’t save the client a good amount, and lock-in a good rate for a few years. My best was getting a church down from 18.5 cents per kilowatt hour to 8.2 cents per kwhr. That’s more than 50% savings!

Energy Savings

Business Electric Rates keep going up

What’s ahead in energy prices?

Although rates have had their seasonal increases due to increased demand from air conditioner use, they are headed higher yet. With coal moving out of the picture, rates will climb just because gas is more expensive for the electricity producers to use. As gas supplies dwindle from the increased demand, gas prices will rise further especially as we move towards the heating season. Noone knows how bad this spiraling effect will get but the industry is poised for some major increases.

To learn more about the situations that will affect future prices, read: The Electricty Price Trend


Here are some more actual Energy Savings Examples

To find out how much your business can save on energy, visit Avion Energy today. Avion is proud that over 99% of businesses, municipalities and non-profits have continued their relationship with Avion beyond the expiration of their initial contract.  Avion Energy has proven very effective in negotiating the best possible rates for their clients on an ongoing basis.