Your Last Wake Up Call: FERC 2022 Summer Assessment

Ever since natural gas prices hit historic lows in the summer of 2020, we’ve been actively warning large energy buyers of rising natural gas and electricity prices and, more importantly, providing clear guidance on what they can do to mitigate the impact of rising prices on their energy budgets.

In two very recent articles, “Don’t Let Energy Prices Get Away from You – Manage Risk Now” and “Procuring Energy in a Time of War and Volatility,” we’ve gone on to point out the latest factors driving up energy prices and the urgent necessity of engaging with us now to put in place an energy risk management plan and a process-driven approach to procure energy most strategically to execute that plan.

But you don’t have to just take our word for it. The Federal Energy Regulatory Commission just published its 2022 Summer Assessment, and the news isn’t good. Specifically, and in keeping with what we have been saying, this summer’s natural gas and electricity prices, which have already surged way above what most could have imagined last year, are likely to get higher not lower. The FERC report goes on to say:

“Growing demand for natural gas, including liquefied natural gas (LNG) exports, is expected to outpace the growth in supply, with natural gas prices expected to be higher than last summer. Specifically, the Henry Hub futures contract price is averaging $7.06/MMBtu for June 2022 through September 2022. Total U.S. dry natural gas production is expected to rise this summer by 3.4% compared to summer 2021, while total natural gas demand is expected to rise 4.8%.”

Simply put, demand is outpacing supply, and that’s without factoring in extreme summer heat and storms. If your current energy strategy is to wait and hope for good news on the energy-price front, we wish you well, but strongly encourage you to join the thousands of companies using Transparent Energy to do more than hope.

The longer you wait, especially if your energy contracts are expiring anytime in the next 12-18 months, the worst this is going to get. FERC’s findings should be your final wake up call.