What to Know, Now: Energy Market Update March 2018


Every month, we want to give you a quick sense of what’s going on in energy markets.

Coming out of winter, prices are down short term, but long term that may change. 

Electric and natural gas prices across the country are impacted by supply and demand in the wholesale natural gas market. Currently, supply of gas storage levels are very low compared to recent history, which may cause higher prices. Natural gas is also the primary fuel for electric generation, and so its price directly impacts electric rates. Weather and temperature trends also affect prices.

The Bottom Line

Current prices for electricity and natural gas compare favorably to 2017 rates and present opportunities to reduce costs through both fixed and variable supply contracts. The lower prices are supported by record high levels of natural gas production. 

What to know about 2018

Today’s lower prices may be temporary. Despite the high production, this past winter’s high natural gas usage has increased the storage deficit to 32% below last year’s level. There is a serious concern the 2018 forecasted hot summer may cause high natural gas demand for electric generation to meet cooling needs. If this happens, gas prices may rise this summer and impact next winter as well. If you have contracts expiring in 2018 or early 2019, you will want to price them early and evaluate your timing on completing your supply contracts. If you are receiving energy procurement services from Bright Power, we will be evaluating this for you.

Why Act Now

Prices forward are less volatile and more favorable compared to 2017 rates. Two key factors worth watching in the near term are the size of the storage deficit at the end of winter and the continued record levels of natural gas production. You may think that watching those two statistics might not be as engaging as the second season of Stranger Things, but we’re riveted by them.