It’s been a very hot July, and the global supply / demand imbalance for natural gas continues to increase. In this month’s edition, we bring you an update on the increasingly volatile energy market followed by our perspective on energy procurement in a new era of hybrid work.
“Natural gas, because of its inflationary impacts is at the heart of a dawning era of confrontation among the great powers so intense that in capitals across the west plans to fight climate change are getting relegated to the back burner”
Bloomberg Daybreak Europe
Azi Feifel
COO PROSPECT RESOURCES
Trends in the Energy Market
After falling in June, NYMEX natural gas futures jumped 56% over several weeks in July and are currently over $8.50 / MMBtu through the coming winter.
The summer has been very hot, both domestically and globally. This has continued to boost the outlook for gas-fired electric power demand. Both electricity and natural gas remain very bullish for the near term.
Natural gas production stands at 96+ Bcf per day, up slightly month-over-month from last year.
Despite the Freeport closure, LNG exports are strong, and underground gas storage is lower than anticipated.
Prompt month crude oil futures have rallied somewhat but remain neutral.
The Fed rate increases, ongoing inflation, the expected recession announcement and the increased jobless claims have led to a bearish sentiment with respect to the economy.
Forward electricity prices were up in all ISO regions. ISONE has seen a particularly high jump. Texas prices in ERCOT remain high with record loads being recorded.
Trending Energy Topics
Natural gas is the hottest commodity in the world right now
Over the years, countries have built infrastructure that greatly increases their reliance on natural gas. It’s cleaner than coal and results in fewer emissions, but now there is a global supply / demand imbalance. Russia has reduced exports of natural gas, putting countries across the EU and Asia at risk for shortages. Even major exporters like the U.S. are huge consumers. What to do? Hear the story on Bloomberg Daybreak
The EPA and Texas Governor face it off over 40% of US oil production
Fortunately for Texas, the Permian Basin accounts for roughly 40% of all oil produced in the U.S. and creates hundreds of thousands of local jobs. Unfortunately, it also may be the subject of a discretionary EPA re-designation unless Governor Greg Abott’s presidential appeal succeeds. The administration has until July 29th to respond.
LA government bans natural gas with nationwide ramifications
Los Angeles has always been on trend, but they may be cutting it too close to the edge with the phasing out of natural gas hookups. Other cities across the country may follow suit. Today 177 million Americans use natural gas as an affordable, relatively clean energy source. While advocates for the environment will consider a policy like this as a win, a great onus of compliance is being borne by the public at large. In the meantime, the best of luck to LA residents learning to use electric stoves. Read the full story here.
Remember when your commercial tenants’ energy usage happened between 9am and 5pm five days a week and all retail establishments were brick and mortar? Well those times are gone. The question is, how will you get creative in managing your energy costs in a whole new world. In the July edition of the Facilities Management Journal (FMJ), Azi Feifel discloses practical strategies for optimizing purchasing against new energy demand and consumption patterns.
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.
When you introduce us to a friend, we’ll give them a free analysis and recommendation for how to optimize their energy usage. You’ll get a Visa gift card for $300 if they become a paying client. To refer your friend, simply email an introduction to your friend and Azi Feifel at azi@prospectresources.com.
Did you know?
According to Global Workplace Analytics, since 2009, the number of people who work from home has risen by 159%. This is primarily due to rapid advancements in technology and increasing value placed on work-life balance. Are your commercial and residential properties purchasing energy to reflect these rapidly-changing usage patterns?
P.S.
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