Holy Guacamole, Batman! Regular Readers Knew This Was Coming ... But Did We Really Think It Would Happen; Natural Gas Spot Price In New England Up To $20 And It May Get Worse

Updates

December 18, 2013: update on the debacle in New Hampshire.
 

Original Post

[Yesterday, I wrote that we would be reading about this in February, 2014. Wow, talk about perfect timing. Thank you, Mr. RBN Energy.]

That "thump" you heard was me falling off my chair, for the second time in less than three minutes, hitting the floor here in a Barnes and Noble-owned Starbucks in Southlake Town Centre, Texas.

I fell off my chair the first time reading about comments from our energy secretary. This time this caused me to fall off my chair (you may have to read this twice to confirm you are not dreaming), from Forbes:

The widely predicted explosion in New England’s energy prices has started sooner than most people expected.

The price of natural gas at Boston’s Algonquin Citygate climbed from $4.13 per MMBtu last Wednesday to $20.40 on Tuesday. (See sidebar at the right for the spot price of natural gas in the rest of the US -- about $4.00.)

Natural gas prices are tightly correlated with electric power prices in New England.  These near-record natural gas prices at the Algonquin trading point pushed forward, wholesale power prices up to more than $100 per megawatthour (MWh) at the Massachusetts Hub for December 2013.

While the $100 per MWh future price may have seemed high at the time, the actual market price is likely to be significantly more than that amount. The real time locational marginal price spiked above $350 per MWh in southeastern Massachusetts early this morning and remained above $250 per MWh for most of the day.

To put this in perspective, spot prices for wholesale, on-peak power in New England are typically between $30 and $40 per MWh.

New England? Think Boston. How is that off-shore wind turbine project working out? Cape Wind? I'm waiting for Ms Elizabeth Warren to comment on this.

The big story line here? This is the end of any real talk about banning fracking. Banning fracking in the US will shut down the domestic oil and gas industry; OPEC prices will skyrocket just on the news.

I thought the Canadian oil sands was the canary in the coal mine with regard to how low the price of oil might get; but the canary in the coal mine turned out to be Boston.

This story in Forbes is not a one-off. It has been predicted for quite some time, and I've posted at least twice on this. A huge "thank you" to RBN Energy for being the first to predict this to readers. If I had time, I would look for additional RBN Energy posts, but too much to do, to include sending a huge "thank you" to the reader who alerted me to this most recent debacle. Throw in ObamaCare and New Englanders are facing a real nightmare come January, 2014. Winters, all things being equal, tend to get colder as we move from December to January to February, but, with global warming, all bets are off.