The Ukraine war spike in energy prices has completely unwound
The Ukraine war spike in energy prices has completely unwound
– by New Deal democrat
I plan on putting up a Coronavirus update later today, because there have been a few significant developments (No, the pandemic is *NOT* over) particularly as they relate to the next few months. Tomorrow and Wednesday, we get our first batch of monthly housing data. In the meantime, today let’s update the situation with energy prices.
And here, the news is unequivocally good. Oil prices, as of this morning, are under $83/barrel. They have remained under $90/barrel for this entire month. Even more importantly, if you follow the dotted line on the below graph all the way to the left, you can see that oil prices now are *lower* than they were before Russia invaded Ukraine:
They are still higher than they were a year ago, when oil was priced at about $70/barrel, but this has been creating, and will continue to create, a second wind for American consumers.
Gas prices, which follow oil prices with a 2 or 3 week delay, are back down to an average of $3.64/gallon, only about 5% higher than they were before the Ukraine invasion:
It is very likely that gas prices will decline to $3.45 or less within the next few weeks, again completely undoing their Ukraine war spike.
Keep in mind, I make no forecast about the future course of oil prices. This is a nowcast only. But the immediate forecast for gas prices is very good.
There’s been a spate of positive coincident economic data in the last month or two, and we can expect this to continue so long as gas prices continue to decline. We only have 12 days left in the 3rd Quarter, and DOOOMers hoping for a third consecutive decline in GDP are probably out of luck.
what has also unwound was any impetus on the part of American oilmen to increase production…10 days ago, i reported a 12 week low for active oil rigs (it has since bumped up) and today i discover well completions (fracking) to be at a three month low…whether the reason for that is the price of oil or the SPR releases, i can’t say, but our oil production is down 7.6% from March 2020, & the number of wells being fracked during August was 15% below the average monthly rate of the year before pandemic hit…
(My) electric bill may go up by more than 60 percent this winter. Here’s why.
Boston Globe – Sep 21
Massachusetts consumers and businesses could be in for some sticker shock this winter when they open their electric bills — and feel the impact of a war an ocean away.
A rate filing on Wednesday from National Grid, showing wintertime power bills rising more than 60 percent from a year ago, is just the latest example of how Russia’s invasion of Ukraine and related energy supply issues are hitting close to home as the winter heating season approaches. Both National Grid and Eversource, the state’s two dominant utilities, have filed for increases in gas rates within the past week, and Eversource is expected to raise its electric rates as well. The higher fuel costs, also seen in the heating oil and propane markets, come as residents face inflation almost everywhere they turn. …
… natural gas-fired power plants still provide at least half of the region’s electricity. Costs for obtaining gas have skyrocketed following Russia’s invasion of Ukraine and the subsequent natural gas shortage in Europe. …