Continued geo-political conflict, resulting fuel supply-chain disruptions, and massive investments all pave the way towards clean-energy sources. Still, it’s easy to forget that natural gas is needed to power our transition away from fossil fuels. Get the latest news about energy sources and their impact on the global economy here.
“The Inflation Reduction Act aims to achieve many goals over the next decade, like reducing emissions at an accelerated rate. However, its name may become a misnomer if investment surges while supply chains remain constrained, fueling inflation.”
Bank of America Global Research Report
Azi Feifel
COO PROSPECT RESOURCES
Trends in the Energy Market
September injections into underground storage have been strong. The 9/22 EIA report showed an injection of 103 Bcf. Accordingly there continues to be some downward pressure on NYMEX futures.
As September comes to an end, natural gas is currently trading in the $7.60 - $8.00 / MMBtu range through the coming winter, with March 2023 futures showing a significant drop.
The summer has been very hot, both domestically and globally. Overall, it will be one of the three warmest summers on record. Temperatures in the Midwest will start to become more fall-like mid-week. Temperatures in Texas will continue to be above normal, and the Southwest will follow that trend.
The coming winter is expected to follow a La Nina pattern for the third consecutive year. Expect some cold in early winter, followed by a warmer December, and colder-than-average temperatures in January and February.
Natural gas production rose again in September to 98.6 Bcf per day in August, up 0.9 Bcf per day from the previous month.
It appears that the Freeport LNG export terminal will resume operations in early November. The increased export volumes will impact underground storage.
Prompt month crude oil futures have risen slightly and are currently trading in the $80 - $85/bbl range. A potential recession in Germany and the broader EU are suppressing crude demand. China’s announcement that pandemic restrictions will be eased is providing some support to the crude market. At the same time, OPEC plans to cut output by 100,000 bbls/day in October.
The economy seems to be giving off recession signals. The financial markets have been bearish again in September. The Fed has raised the interest rate by another 0.75%, and looks to be hawkish moving forward.
Forward electricity prices continue to be high across all ISOs. The week of 9/19 has seen some pullback.
The intensity of the cooling demand in ERCOT (TX) has subsided somewhat. There were a total of 47 days of +100F in June through mid-August.
Trending Energy Topics
The Inflation Reduction Act may result in higher energy prices
At $369B, the biggest clean-energy spending package in U.S. history will have unintended consequences if supply chains can’t keep up with capital investment. We need more capacity for energy transmission or renewable energy sources will not be efficiently brought to market. Enter increased price volatility. Read more
Myth versus fact: Natural gas facilitates the transition to clean energy
While the new Mountain Valley pipeline faces opposition from environment activists, the increased access to natural gas will reduce power plants’ reliance on coal and resulting emissions. As U.S. consumers increasingly purchase electric vehicles, more natural gas will be needed, not less. Read more
Russia is setting fire to fuel. A message to Europe?
Russia is burning off an estimated $10M of natural gas a day - even as Europe faces down a winter energy crisis, rising inflation, and a weakening economy. While this might be part of routine operations, it is an environmental disaster with about 9,000 tons of carbon dioxide released daily. The flames are highly visible - perhaps signaling that gas is ready to flow to Europe if friendly political relations should resume. Read more
As we enter a time of rapid inflation, we recognize that you’re scrutinizing every line item in your budget - and in many buildings energy represents 19% of expenditures. Add to that the recent price volatility in the energy markets and you could get hit with a devastatingly high energy bill (remember the polar vortex and Texas power crisis). Now is the time to ask yourself - is my energy budget ready for the turbulent years ahead? View our checklist to find out.
FROM 2014 TO 2020, PROSPECT RESOURCES SAVED A RENTAL PROPERTY GROUP $1,289,454. THE CLIENT SAVED 19.53% ON THEIR TOTAL ENERGY EXPENDITURE AND 7.5% ON THEIR ELECTRICITY COSTS.
The case study demonstrates how active energy procurement helped PRI achieve this instead of relying on long-term energy contracts that can leave lots of market risk for property managers.
Thank you Hillel Krinsky for your kind words. “The team at Prospect Resources is very transparent about the current energy market and how they can help your business save on rising energy costs. This is a space that is very fluid and sometimes difficult to understand. It is great to have trusted professionals at PR to help navigate this volatile sector.”
Some utilities reward you for agreeing to reduce electricity demand at peak times. This program is called Load Response and it’s getting popular as the price of capacity increases. Get in touch with us for guidance on how much to reduce your electricity demand and to choose an appropriate provider.
P.S.
Follow us on social media for more updates like. this, and don't forget to check our website for even more resources!
8170 McCormick Blvd, Suite 107, Skokie, IL 60076 Phone: 847.673.1959 Fax: 847.673.1490
