Weekly Energy Market Updates by Region




Issue week: June 10th, 2022  (Wk 23)





WEST  Since June began, the Day Ahead average is about $71/MWh in CAISO and $34/MWh Mid-C, although warm June weather actually nudged the CAISO average above $90/MWh today. In the forward market, the historically high volatility, driven by large daily swings in the NYMEX forward curve, continues. Next week, high temperatures projected throughout California and the Southwest should provide the first taste of summer demand.

ERCOT  Real-time prices for this first full week of June have been approximately $10/MWh higher than those of last week as the lion’s share of the state continues to feel the double whammy of ongoing drought and consistently high temperatures with not much change expected next week. Meanwhile, amid the wild ride that term natural gas prices have been on this week, term power prices have risen by some $3.00/MWh throughout the curve.

EAST As weather this week has overall been warm but not hot, index prices have ranged from $90/MWh to $110/MWh in the Midwest but only from $70/MWh to $90/MWh in the Northeast. Thermometers should reach the upper 90s next week in the Midwest, likely lifting index prices higher.


The EIA reported Thursday morning that, for the week ending June 3, U.S. inventories increased by 97 Bcf, essentially matching the predicted increase of 97.3 Bcf. Total stockpiles now stand at 1,999 Bcf, down by 16.6% from a year ago and 14.5% below the five-year average for the same week.

NYMEX futures have been especially volatile this week. For example, the market pulled way back yesterday after an explosion at the Freeport LNG facility on the Texas Gulf Coast, which handles approximately 20% of LNG processing in the U.S. The market is still trying to cope with the effects of the explosion, which should ultimately keep more natural gas in the U.S. to replenish stocks in the short term. Most of yesterday’s drops were recovered today; prompt month July closed at $8.963/MMBtu















Winds of Change Blowing Off the Gulf Coast

States along the Gulf Coast, such as Texas, Louisiana, Mississippi, Alabama, and Florida—all of which have longstanding ties to the oil and gas industry—have especially felt the impact of the national crusade to spurn fossil fuels in favor of carbon-free renewable electricity generation. Indeed, Nichola Groom of Reuters reported just last month that a court order voided the most recent auction of offshore oil and gas drilling rights in the Gulf of Mexico. Serendipitously, however, those same waters boast another resource that may keep those states just as important in the new energy climate (no pun intended): wind.

The Biden Administration has made no secret of its goal to have 30 GW of U.S. offshore wind capacity online by 2030, and two studies by the National Renewable Energy Laboratory (NREL) completed two years ago suggest that the Third Coast actually has the potential to provide much more—508 GW—through that technology. Moreover, the NREL report projects that each new wind facility in the region could realize pure economic gains of roughly 4,500 jobs and $445 million of additional GDP from its construction and 150 jobs and $14 million of GDP from its ongoing operation.

Writing for Politico last month, Kelsey Tamborrino conceded that Gulf states must contend with perennial hurricanes and negotiate the challenge of protecting billions of birds from the hazard of wind turbines and do not even have winds as strong as those blowing off the Atlantic Coast. She observed, nonetheless, that established infrastructure in the form of human know-how and skilled labor, best exemplified by the role of Louisiana oil and gas outfits in building the first U.S. offshore wind farm in Rhode Island in 2016, should keep the region in the national conversation and calculus on the proliferation of wind energy. As Amanda Lefton, Director of the Bureau of Ocean Energy Management, told Tamborrino, “The people, the companies, the manufacturers that know how to do [Outer Continental Shelf] energy development are in the Gulf of Mexico.” Tristan Baurick of The Times-Picayune / New Orleans Advocate elaborated on that point last November: “Many of the skills needed in the offshore oil and gas industry are directly transferable to building and servicing wind farms.”

Rather than view renewable wind generation as a threat to the legacy energy industry of his state, Louisiana Governor John Edwards is confident that offshore wind turbines will complement existing offshore assets such as oil rigs. Beyond the boon of extra, clean energy itself, however, plans to adapt local expertise to the development and deployment of the new technology are certainly encouraging. Perhaps they can set a positive example for other parts of the U.S. to ensure that all energy workers throughout the country thrive as the inevitable transition away from fossil fuels comes closer to fulfillment.




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