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NATURAL GAS PRICES WAY UP: As temperatures are rising, so are natural gas prices. NYMEX futures opened again today at levels not seen since 2008 and are seeing intra-day trading in $9 per MMBtu territory for the second day in a row.
Prices have been creeping up much of the year but really took off starting in April. The month’s highest prompt month futures contract was $7.8 per MMBtu, more than 2.5 times higher than April 2021’s high of $2.93 per MMBtu.
One of the leading factors government and private sector analysts charged with driving prices up throughout April — extended cold temperatures — is changing as weather warms, but prices have only increased.
“Demand continues to be high but for different reasons,” Juan Alvarado, director of energy analysis for the American Gas Association, told Jeremy.
Residential and commercial demand for gas for heating purposes is falling, but electricity generators are gearing up for a hot summer, he said.
The Energy Information Administration’s most recent energy outlook assessed that prices “could rise significantly above forecast levels if summer temperatures are hotter than assumed in this forecast and electricity demand is higher.”
Alvarado suspects market speculation based on that expectation is, to some degree, playing a larger role in the pricing dynamic. He said he’s been seeing more interest in futures contracts.
“If the market continues to believe prices will rise, they will continue to lock in to contracts now to ensure higher prices don't hit them too hard,” he said.
Storage still a factor: Natural gas storage levels are still below the five-year average, one of EIA’s considerations in assessing and predicting higher prices.
“You usually see big injections into storage” this time of year, Alvarado said. “We have seen some good injections … but those are not seen as big enough.”
What to expect: Electricity prices to rise.
Alvarado: “Bearish indicators like renewables are not going to be able to keep up with prices of coal and gas. Inevitably, electricity generation prices are going to have to go up.”
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SEC PROPOSES NEW ESG RULES IN A BID TO PREVENT ‘GREENWASHING’: The Securities and Exchange Commission issued two new proposals this week aimed at tightening up rules around investments that prioritize environmental, social, and corporate governance (ESG) factors—seeking to crack down on a growing trend of “greenwashing” among investors.
The two proposals, approved for the public comment period by 3-1 votes, would increase disclosure requirements for ESG funds and broaden SEC rules governing fund names, the Examiner’s Zachary Halaschak explains.
The SEC said the proposal regarding disclosures would help "promote consistent, comparable, and reliable information for investors" about how their funds and advisers use ESG in their business making decisions.
MASSACHUSETTS TO MOVE FORWARD WITH TWO BIG OFFSHORE WIND PROJECTS: Two Massachusetts utilities filed long-term plans yesterday to advance two large offshore wind projects, officials announced, representing what will be the state’s largest offshore wind venture yet, and a key step in helping Massachusetts deliver on its clean energy goals.
Officials said the new facilities will add roughly 1,600 megawatts of wind power to New England’s grid. And combined with previously procured projects, they will produce enough energy to power nearly 1.7 million homes.
The planned projects, Commonwealth Wind and Mayflower Wind, are slated to be built south of Martha’s Vineyard, E&ENews reports, and will supply power to utilities National Grid, Unitil Corp., and Eversource Energy. The news comes as Massachusetts and other parts of New England have struggled with grid reliability and security concerns, prompting grid operators to warn last year that their systems could be “vulnerable” in winter.
DEMOCRATS CALL FOR WINDFALL TAX BILLS TO MOVE: Nearly 50 congressional Democrats are calling on their leadership to bring legislation to the House and Senate floor that would impose a windfall profits tax on energy companies, accusing those companies of taking advantage of high oil prices “to enrich executives and investors at the expense of average Americans.”
The House passed anti-price gouging legislation last week but the lawmakers and liberal groups want Congress to go further to take a share of the large profits that oil companies are enjoying and return it to drivers.
Sen. Sheldon Whitehouse of Rhode Island and Rep. Ro Khanna of California each introduced legislation in March that would collect new taxes on oil companies' profits and rebate money to drivers, but Democrats have instead prioritized proposals that charge the Federal Trade Commission with enforcing a ban on selling fuel at “unconscionably excessive” prices.
The energy industry and some independent analysts have disputed the price gouging allegations, arguing that fuel prices are being driven by high oil prices and a shortage of refining capacity.
Across the sea: Spain and Italy have already introduced windfall taxes on energy companies’ profits as a way to help consumers, whose electricity and fuel bills are considerably higher than in the U.S.
The United Kingdom’s Conservative government has also decided to impose a 25% tax on oil and gas companies’ profits.
Chancellor Rishi Sunak said as the government considers how to help consumers with high costs, “We need to think about the fairest way to fund as much of that cost as possible.”
“The oil and gas sector is making extraordinary profits, not as the result of recent changes to risk taking or innovation or efficiency but as the result of surging global commodity prices,” he said before Parliament earlier today.
CAN THE EU REACH CONSENSUS ON A RUSSIAN OIL BAN? EU leaders are divided on whether or not they can rally member nations behind a proposed Russian oil embargo with just days before leaders convene for next week’s summit in Brussels.
Asked yesterday about the prospective oil ban, European Council President Charles Michel told reporters he is “optimistic” that EU nations can unite on a deal in time for the summit. “I’m still confident that we can be able to resolve the topic before the European Council,” Michel said, acknowledging that unity requires “a lot of dialogue” and political efforts.
"We’re working to be innovative, to be constructive in order to put some proposals on the table that will allow us to protect the unity and be united … And I hope, I sincerely hope that we will be united at this European Council meeting on Monday and Tuesday,” Michel said.
But one day earlier, European Commission President Ursula von der Leyen struck a very different tone—saying in an interview with Politico EU that she did not want to raise “false expectations,” and adding it might take the bloc “weeks” to reach a deal.
MEANWHILE, IN SWITZERLAND, EXPERTS URGE CAUTION: World leaders in Davos, Switzerland, warned this week that while Russia’s war in Ukraine has temporarily disrupted many clean energy efforts, it should not discourage the West’s longer-term progress in transitioning away from fossil fuels.
Speaking at the World Economic Forum, IEA chief Fatih Birol cautioned that while immediate energy security questions are all legitimate, they “should not be confused [with] making a large-scale, new wave of fossil fuel investments.”
As the Wall Street Journal reported, this sentiment was echoed by Siemens Energy AG chairman Joe Kaeser, who noted that energy security concerns were prompting ideas from customers he’d presumed were “long dead”: “We see a lot of people talking about a lot of things which I would have never guessed would be back on the table,” he said, “like drilling in the North Sea.”
“This is crisis-management time,” said Daniel Yergin, an energy historian and vice chairman at S&P Global. “You have to assume that things get worse.”
As we noted earlier this week, this messaging has also been embraced by the Biden administration’s climate envoy, John Kerry, who traveled to Davos this week bearing the message that the war in Ukraine should not be used as a reason to backslide into dependence on fossil fuels.
Associated Press An ocean first: Underwater drone tracks CO2 in Alaska gulf
Bloomberg Hunt for lithium sparks frantic rush into Argentine mountains
TechCrunch Joby Aviation secures certificate to operate commercial air taxis
ClimateWire How pausing the social cost of carbon affected regulation
New York Times It’s not a bird or a plane. It’s a skydiving salamander
E&ENews Feds propose listing Russian sturgeon, a fish now in a war zone
THURSDAY | MAY 26
2:30 p.m. The House Homeland Security Transportation Security Subcommittee will hold a remote hearing on the state of the Transportation Security Administration (TSA), which will include testimony from TSA Administrator David Pekoske. The hearing can be streamed online here.
4:00 p.m. The Baker Institute Center for Energy Studies will host a webinar to answer the question, “What’s up with prices at the pump?”
WEDNESDAY | JUNE 8
10:00 a.m. 406 Dirksen The Senate Environment and Public Works Committee will consider the nominations of Annie Caputo and Bradley R. Crowell to be members of the Nuclear Regulatory Commission.