Market
Overview:
Energy
traders continue to move the markets with volatility and the back-and-forth
pricing action has left everyone searching for certainty and a clear
direction. On the one hand we are still faced with the speculation that an
Iranian nuclear situation might cause a decrease in the world’s 4th
largest oil producer’s output. Other headlines such as BP’s shutdown in
On the
other hand, economic reports are surfacing about the bottom falling out of the
housing market. This could potentially cause a general economic slowdown
which might generate less than expected demand for energy. Summer-driving
is nearing an end, gasoline demand is tapering and suppliers are cranking it out
due to very high profit margins. Power demand from air conditioning isn’t
nearly as high as it could be and natural gas supplies are currently
plentiful. Injections to gas storage may even have to be slowed as we
approach the winter since there is so little space left to put it. If this
happens, it will add significant pressure to the price of the heating fuel as
well as forward electricity in regions that rely heavily on gas fired power
generators.
What we
know for sure is that there will remain a hefty pricing premium for fuels and
electricity for the foreseeable future. The market is looking for some big
questions to be answered to help determine which side of the trade to be
on. Either way, this hurricane season is sure to cause some ripples in the
market given the fact that last years destruction from Katrina and Rita is now
being projected to cost tens of billions of dollars to the oil and gas companies
alone.
By the
beginning of winter, if natural gas storage are full and there isn’t too much
additional damage to Gulf production, we will likely see a significant price
softening before the winter arrives in earnest…sometime in mid-December.
Since futures pricing premiums are still hefty, it still makes sense to leg into
a fixed rate for some, but not all, commodity in the coming weeks and
months. I am hoping for ripe market conditions and I am considering buying
for my clients no more than about 50% forward gas and fixed electric for the
coming winter and summer while letting the remaining 50% load float at spot
market rates. Please reach out to
Regulatory
Update:
If you have
not yet taken a quick read through the 1700 odd page Energy Policy Act of 2005
to figure out just what to do next, try not to lose too much sleep. Taking
advantage of several provisions may be to your benefit but many specifics still
have yet to be ironed out, published and distributed for general
consumption. Keep an eye out, I am expecting a roll-out of many of the
details soon.
Check
out the coming event for more info:
The
New Energy Tax Act
Presentations will
be on the new Energy Tax Act federal tax deductions for energy reducing
investments for commercial building owners and tenants. Architects and Engineers
may benefit on their personal tax for municipal buildings as well as residential
property owners. Discussion will include how to plan to maximize the
deductions related to Lighting, HVAC and building envelope investments. This is
FREE to attend but you must register online
WHEN:
WHERE: Wolferts Roost
Country Club,
Presenters: Charles Goulding
Attorney/CPA /MBA and Jacob Goldman Engineer/MBA
For more information:
US DOE “Short Term Energy Outlook –
August 2006”:
Significant relief from the high crude oil and gasoline
prices is not likely to occur soon as the current tight market must also cope
with strong gasoline demand, which typically reaches its seasonal peak in
August, and the traditionally more active months of the hurricane
season.
In 2006 and
2007, the WTI crude oil spot price is projected to average around $70 per barrel
(West Texas
Intermediate Crude Oil Price). In mid-April 2006, the daily WTI spot
price passed the $70 level and is now in the mid-$70s. Adjusting for
inflation, crude oil prices have not been this high since late 1982. A
special supplement, Why Are
Oil Prices So High? discusses in more detail the
factors contributing to high crude oil prices.
Retail regular gasoline prices are
projected to average $2.72 per gallon in 2006, and $2.67 in
2007 (Gasoline and Crude
Oil Prices). Summer 2006 (April 1 to September 30) regular gasoline
pump prices are expected to average $2.92 per gallon, 55 cents higher than last
year's average of $2.37 per gallon. Summer 2006 retail diesel fuel prices
are expected to average $2.91 per gallon, 50 cents higher than last year's
average of $2.41 per gallon.
Natural gas prices are projected to be
lower through the rest of this year relative to the corresponding period in
2005. The expected 2006 average of $7.69 per thousand cubic feet (mcf) for
Henry Hub spot prices would be a drop of $1.17 from the 2005 average (Natural Gas Henry
Hub Spot Prices). For 2007, the Henry Hub average price likely will
move back up to an average of $8.17 per mcf, assuming sustained high oil prices,
normal weather, and continued economic expansion in the
Continued at : http://www.eia.doe.gov/emeu/steo/pub/contents.html
STEO
Supplement: Why are oil prices so high?
Read here: http://www.eia.doe.gov/emeu/steo/pub/special/high-oil-price.html
Strong Growth in
World Energy Demand is Projected Through 2030
Worldwide marketed energy consumption is projected to
grow by 71 percent between 2003 and 2030, according to the reference case
projection from the International Energy
Outlook 2006 (IEO2006) released today by the Energy
Information Administration (EIA). The IEO2006 shows the strongest energy
consumption growth in developing countries outside the Organization for Economic
Cooperation and Development (OECD), especially non-OECD Asia (including China
and India), where robust economic growth drives the increase in energy use.
Energy use in non-OECD
It looks as though there might be some oil supply relief
on the horizon as Iraqi production ramps up:
Oil majors maneuver for prime
position in
From a
safe distance, multinationals are poring over data from
Iraqi Oil
Minister Hussain al-Shahristani has signaled the race for oilfield deals worth
$20 billion could start this autumn. But oil men, noting a lack of security and
investment law, are under no illusion that drilling is imminent.
"We've
been doing a lot of work behind the scenes and are ready to act quickly -- but
under the right conditions," said a senior Western oil executive.
"At this stage, there is an
effective short list of key oilfields and players. It's been a natural
selection."
If you haven’t been spending your SBC funds lately, have
a look at what NYSERDA is offering:
NYSERDA’s Current Funding
Opportunities
http://www.nyserda.org/funding/funding.asp?i=2
Looking for a certified PV
Installer:
http://www.powernaturally.org/Programs/Solar/Installerspv_bycounty.asp?i=1
Also check
out:
Clean
and Green
6th
Annual
Empire Energy &
Environmental
Exposition
September 25 &
26, 2006 - Syracuse ,
NY
Oncenter Complex -
Updated
Agenda
http://www.e4ny.com/program.html
We have moved to
Great Forest,
Inc.
There is
only so much benefit procurement efforts can achieve. While kilowatts and
megawatts will cost you an uncertain amount of money in the very near future,
negawatts can and will pay you back…but are best generated with full and willing
cooperation of the entire company.
The US DOE
has devised a number of tools for management, property operations and financial
folk to better explore the available options when determining what energy
projects will be winners. Most of these tools are available from the
DOE. However, they are also very time consuming and detail oriented.
Please reach out to
A big part
of this management strategy and plan implementation will be to educate the
players, from the top level executive to the guy that flips the switches every
day. The goal is to fully integrate a plan that permeates the entire
organization. We will help set the foundation, get the ball rolling and
then monitor the progress over time to ensure that none of the pieces of the
puzzle fall apart. If they do, we will be there to fit a new one into
place.
As part of
Great Forest’s focus towards becoming a leading Sustainable Business Consulting
firm, Energy is an immensely critical area of focus that not only is necessary
and expensive, but also potentially destructive in ways we are not very sure
about. We can diminish our potentially damaging impact while at the same
time saving money or even generating a revenue source through demand reductions
and curtailment of energy usage. It may eventually benefit your company in ways
that are yet to be standardized in the
International markets have been up and running for some
time now but the
In other
news:
Intro. 20 - A
Global Warming Strategy for
The synopsis of this bill is as
follows:
- Creates a
framework of transparency with annual reporting of greenhouse gas (GHG)
emissions and plans submitted to the public. (This is often a problem
with city government.)
- It also commits
the city to 20% reductions of GHGs from a 1994 baseline by 2009
- Stipulates further
reductions of 25% by 2015 and 30% by 2020.
- It creates a framework for
involving private sector partners
- And it covers all
city operations
INITIAL REPORT ON THE POWER
OUTAGES IN
http://www.coned.com/messages/Mayors%20Report.pdf
Comprehensive Reliability Plan
Released by the NYISO Study is a key step in grid operator’s ongoing
planning process.
http://www.nyiso.org/public/webdocs/newsroom/press_releases/2006/pr_nyiso_crp_final_082306.pdf
It is always a
pleasure to serve you. Please let us know if there is anything we can
assist you with!
Michael C.
Sanfilippo
Energy
Consultant
Great Forest
Inc.
p:(212)
779-4757
m:(917)
656-4985
f:(212)
779-8044