Even though energy prices remain at historic lows – we are seeing a steady rise of late. Understanding the market and the factors that influence fluctuations, aids in helping you know what you can do to control your costs.
Since setting their lows for 2020 in mid-March, forward electricity prices in the Midwest have steadily moved higher. Calendar strips for 2021, 2022, 2023 and 2024 all traded at their highest level of 2020 this week.
With so much uncertainty still surrounding the economy and the full effects of the pandemic, it would not be a stretch to anticipate energy prices remain low compared to historical averages. There are several factors beyond the economy that are boosting Midwest electric prices in forward years. With the fall in crude oil and natural gas prices, production of natural gas has declined as natural gas rig counts went from a high of 200 in early 2019 to a current level of 70 in the US. Natural gas accounts for over 35% of the US’s electric generation. Additionally, summer 2020 is currently projected to be the 4th hottest since 1950. The warm summer which increased cooling demand has put pressure not only on electric prices but on other commodities like natural gas that are used to generate electricity.
Energy markets can be volatile and unpredictable. Let the IRMA Energy Team assist you with any of your electric or natural gas buying decisions.