Wednesday, August 05, 2015

Gas Volatility

Back when I was trying to make Energy Cache work, a big headwind that I ran into was the falling price of natural gas due to fracking.  The EIA reported that gas prices for electric power generation were hovering around $3.

I tried to make the argument that, long term, prices would go back up.  And by early 2014, they had - almost to $8/MMBtu.

However, I just checked recently and they are back to $3.  This is crazy.  Look at the Year on Year variability!

It's not that uncommon for the price of gas to be either 50% higher or 50% cheaper than the year prior.  Hedging this risk must be crazy expensive, and there has to be an opportunity in here somewhere.

Of course...we think there is - by moving your peaking and firming fuel from gas to the sun.  :-)

All data from: