Energy News – May 2021
Spring weather is here! While the warm weather will bring relief to many, it also poses new challenges. This month’s energy news will detail how our summer forecast could keep up demand for natural gas, how utilities are responding to the market impact from Winter Storm Uri, and what could impact natural gas prices in the long term.
Short Term: Still Navigating the Impact from February
In our April newsletter, we discussed the impact that the February weather event had on the energy markets. We’re starting to see how utilities are responding with price increases to cover the costs that were incurred during the market event. For example, MidAmerican Energy Iowa and Wisconsin Gas have both raised prices more than 150 percent from a year ago.
Summer will be here before we know it! According to the National Oceanic and Atmospheric Administration (NOAA), much of the United States will have a hot, dry summer which is expected to bring some of the worst drought conditions in 20 years. This will impact natural gas in two ways. First, farmers rely on natural gas to power their irrigation equipment to water crops. Secondly, we all like to come home to a nice, air-conditioned house. With more of the nation’s power being generated by natural gas, the demand is expected to be high as more people turn up their air-conditioning.
Long Term: Can Production Keep Up with New Demand?
Since the start of the pandemic, we have seen oil and gas production reach new lows as demand dropped off when much of the country was shut down. Now, as we continue to reopen our economy with states lifting restrictions, the demand for oil and gas is increasing. Since it takes time for wells to reopen and rigs to come back online, we may see prices hold steady throughout the summer and increase significantly for next winter.
Additionally, there is new legislation from Washington on the horizon that is pointing towards a constricted level of production, therefore leading us to the conclusion that long-term prices will continue to increase or plateau at a higher price.
Please see below for further data on national and local gas market prices:
Market Data – May 2021
Weekly Natural Gas Storage
CME (Henry Hub) Natural Gas Futures $/Dth
Utility Costs of Gas/ Dth
|Month||MidAmerican – IA||Alliant – IA||Black Hills – NE||Black Hills- IA||Xcel Small Volume||Xcel Large Volume|
Local First of the Month Markets
|Month||NNG Ventura||Chicago Citygates||Colorado Interstate Gas|