Ian Patrick, FISM News
With the state of inflation and increasing gas prices, it should come as no surprise that natural gas prices have hit highs not seen since 2008. Now, these higher natural gas prices are raising new concerns about potential summer blackouts.
On Wednesday, prices for natural gas soared up to $9.399 per million British thermal units, or BTUs, before pulling downward and ending the day at $8.971 BTUs.
The over $9 price is the highest that natural gas prices has been since August 2008. The high price also adds to a 196% total increase in natural gas prices from last year alone.
David Givens, head of natural gas and power services for North America at Argus Media, gave three reasons for this increase according to CNBC: little production growth, high liquified natural gas exports, and storage levels that are roughly 17% below the five-year average.
The North American Electric Reliability Corporation (NERC), which Fox Business describes as “a nonprofit entity formed to promote the reliability and adequacy of bulk power transmission in the electric utility systems of North America,” has taken notice and warned of future energy blackouts.
The NERC’s 2022 “Summer Reliability Assessment” report says that the “Midcontinent ISO (MISO) faces a capacity shortfall in its North and Central areas, resulting in high risk of energy emergencies during peak summer conditions.” This is because of increased demand along with the drop in energy capacity for the region.
Across MISO, peak demand projections have increased by 1.7% since last summer due in part to a return to normal demand patterns that have been altered in prior years by the pandemic. However, more impactful is the drop in capacity in the most recent PRA: MISO will have 3,200 MW (2.3%) less generation capacity than in the summer of 2021. System operators in MISO are more likely to need operating mitigations, such as load modifying resources or non-firm imports, to meet reserve requirements under normal peak summer conditions.
The report includes other areas of concern, such as an out-of-service transmission line and the damaging effects of drought on Western states.
The Western drought will certainly be a cause of concern for energy consumption, as the NERC explains that it will affect output for hydro generators in California and thermal generators using the Missouri River for cooling.
Campbell Faulkner, senior vice president and chief data analyst at OTC Global Holdings, told CNBC that the drought has drastically impacted the hydro generators and therefore pushed gas “to fulfill a significantly greater portion of power burn during a summer that looks to top records for electricity load.”
California Governor Gavin Newsom, a proponent of the green energy push from leftist Democrats, said he may consider keeping a nuclear power plant open beyond its original 2025 closure date just to help with these energy issues.