Understanding the 'Commodities Super Cycle' and Its Impact on New England Electric and Natural Gas Rates
What exactly is a 'Commodities Super Cycle'? According to capital.com, it refers to an extended period of boom and bust in the commodities markets, where prices deviate significantly from their long-term trends. Interestingly, all commodities tend to move together over long periods, typically lasting between 15 to 20 years. The chart below highlights the average 17-year cycle, illustrating this phenomenon.
The Bearish Cycle:
For quite some time, we have been in a bearish cycle across all commodities. Crude oil, for instance, was trading in the high teens in 1999 and 2020. Similarly, natural gas prices remained within the $2 to $4 range for 20 years, except for a few exceptions between 2005 and 2009 when it reached all-time highs of $14/Dth.
Source: Bloomberg-Bureau of Labor Statistics & Bureau of Economic Research-Wells Fargo
A Case for Energy:
Now, let's explore why Technical Financial Analysts are pointing to an impending transition from a bear to bull Super Cycle for energy. Several key events contribute to this shift, including the post-pandemic recovery, the modernization of infrastructure, and the ongoing conflict in eastern Europe. The combination of these factors, along with washed-out prices and low price action, has led John Laforge, Head of Real Asset Strategy at Wells Fargo, to confirm the start of the bullish Super Cycle.
This confirmation is supported by the experience of rate payers in New England, who have been grappling with unprecedented electric and natural gas rates since mid-2022. Although temporary relief is expected this summer, the pivot to higher rates will occur when the United States and other countries that rely on natural gas for winter increase their inventories. Another significant proof point is the continuous increase in supply by producers, despite the market prices dropping from $9.00 to $2.00. This counterintuitive reaction can be attributed to the opening of LNG terminals for export, higher gas demand for power generation, and increased exports, all of which are keeping rigs busy.
Why Enroll NOW?
Considering the bullish Super Cycle and the drop in natural gas prices, there has never been a better time for energy users to consider enrolling with a third-party energy supplier. This decision offers several compelling advantages:
Possible Cost Savings: By partnering with a third-party energy supplier, you gain access to competitive pricing and potential cost savings on your energy bills. Take advantage of the current market conditions and secure a favorable rate that aligns with your budget.
Renewable Energy Options: We offer renewable energy options, allowing you to contribute to a cleaner and greener energy future. Make a positive impact on the environment by opting for sustainable energy sources.
Customized Energy Plans: Tailor your energy plan to meet your specific needs. With Neighborhood Energy, you have the flexibility to choose a plan that aligns with your consumption patterns and lifestyle, optimizing both your energy usage and costs.
It's essential to stay informed about the energy market and seize the available opportunities to make smarter, more sustainable energy choices. By partnering with Neighborhood Energy, you can take control of your energy costs while actively contributing to a cleaner, more efficient energy future.
Conclusion:
The 'Commodities Super Cycle' is an influential force that affects energy markets, including electric and natural gas rates in New England. As we witness the transition from a bearish to bullish phase, it's crucial to understand the implications and capitalize on the advantages presented. Enrolling with Neighborhood Energy empowers you to save costs, access renewable energy options, and customize your energy plans.
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