1. Natural gas futures prices fell to another 10-year low today
of $2.208 per million BTUs on the New York Mercantile Exchange, see chart above. In nominal dollars, that's the lowest price for natural gas since February 2002, and adjusting for inflation it's the lowest price since July 1995, almost 17 years ago
2. Michigan-based Consumers Energy announced today
that it will lower natural gas prices starting next month for 1.7 million customers by 13% -- welcome news in tough economic times and rising gasoline prices. Customers will save about $130 million in energy costs over the next year as natural gas prices drop to levels not seen in nine years.
This long-term reduction in natural gas prices comes on top of lower fuel costs from the recent mild winter, saving a typical residential gas customer about $94 compared to the previous year.
"It's the most dramatic change that is happening beneath the surface of the U.S. economy today. As the rest of the world struggles with oil prices that are very expensive both nominally and in real terms, the U.S., thanks to new fracking technology, is enjoying natural gas prices that are plunging. Even as crude oil prices have surged over the past 13 years from $12/bbl to over $100, the price of natural gas in the U.S. is roughly unchanged on net. That means that natural gas has dropped by an astounding 85% relative to crude oil (see recent CD post here
). We've never seen anything like this
The U.S. now enjoys an incredible energy price advantage that not only is transforming industries (for example, it shouldn't be too long before we start seeing cars that run on LNG), but that should be an important source of growth for the entire economy. This could be the best reason to be bullish."
MP: As Robin West, chairman and CEO of PFC Energy, reminds us "This shale gale is the energy equivalent of the Berlin Wall coming down. This is a big deal."