As I mentioned in my previous post, “Is Meteorology turning into Computer Science”…weather companies are on the look out for meteorological developers.   That’s where the hiring from weather companies seems to be focused these days.   If you are a degreed meteorologist who can code in multiple programming languages…companies want to talk to you ASAP.   If you are good, they are ready to throw down some serious cash!

One of my buddies at Earth Sat Corporation is hiring for two positions.   The first is for a Web Applications Developer and the second is for a Meteorological Applications Developer.   These positions will create new weather analysis products and systems and have the chance to interact with forecasters on a day to day basis.  Might be a great way to get your foot in the door into a large weather company.   EarthSat is also a leader in the energy weather business…and it’s a great way to meet a lot of their energy trading clients too.

Folks, there are many other companies I know trying to fill these types of roles.   I’ll be happy to help as best I can.   Email me (or respond in the comments section below) and I’ll hook you up directly with the hiring managers.  I’m always an advocate to push for weather companies to hire talented meteorologists….even if they are for developer positions.

Let me know if you are interested?! (Photo credit: Bevan Colless)

I thought I had covered most meteorology career paths, until one of my blog visitors reminded me of the very important work of forensic meteorologists. Forensic meteorologists are useful in reconstructing past weather events at a certain time and location.   We’re all used to ‘meteorologists’ forecasting the weather…but forensic meteorologists are experts in knowing what weather has already occurred.

Most forensic meteorologists are private consultants, or work in part of a group at large weather companies.  The data compiled by a Forensic Meteorologist is typically used by lawyers, insurance companies, airlines, or government agencies.   And these are generally the specific sectors that will usually hire forensic meteorologists for any analysis/reconstruction work that would need to be performed.

Forensic meteorologists are largely responsible for helping in civil cases around the country…and sometimes even criminal cases.   It’s pretty fascinating how meteorologists can be used for so many legal proceedings.

Let’s just take a few examples…

1) Murder Trial:  About 10 years ago in the state of NY…a man was accused of murdering 2 people to death.  Part of the accused murder’s alibi was that a cut on his hand did not happen at the time of the murder…but when he was snowboarding with his son.  So a meteorologist was called to determine if there was any snow on the ground at the time (and if it was indeed snowing).   Once a forensic meteorologists identified the facts…it was determined there was no snow, and it was raining.  It was also determined that light rain was significant enough to melt any snow.  Therefore, it was determined the accused murderer was lying and, the jury convicted the accused of murder.   Wow!

2) Car Accidents:   Forensic meteorologists are generally involved in analyzing many car accidents that are blamed/or due to a weather event.  From icy road conditions, to flooding on the roadways,  to glare from the Sun,  or even foggy conditions reducing visibilities are some of the examples that have occurred.  This makes forensic meteorology work very important to insurance companies who are gauging whether weather was to blame in an accident (or if the driver was at fault).

And  of course there are many more examples of how forensic meteorology is used today.  To see a list of more samples of cases, you can visit Weather Consultants website, here.

But here’s what I’m baffled about. And just so you’re aware in advance…what I’m about to share with you will probably make your jaw drop.  According to the website Law Crossing….a 4 year BS degreed forensic meteorologist on average makes just under $1.5M annually!?  A 4 year MS degreed forensic meteorologists makes over $1.5M annually!?   And a PHD forensic met apparently brings in over $2M annually!!

Oh wow, are we all in the wrong weather sector or this information completely ludicrous??  In case you think I’m making this up…here’s the link where I found this information.   I’m personally not buying this (or maybe it’s the case for a select few)…but then again I’d like to be given confirmation this is wrong by an actual forensic meteorologist.

Professional Forensic meteorologists out there….is this salary range accurate? And in addition to the salary range, feel free to offer any perspectives for how a young graduate or working meteorology professional can become a forensic meteorologist. Thanks!

Starting your own weather consulting business can be both rewarding and frustrating at the same time.   It’s a very cyclical business with lots of ups and downs, but I think it’s worth exploring of yet another avenue for your meteorology career.

In my previous post, I discussed how weather risk will be a growing sector in the “Future of Meteorology.”  As companies begin to realize how weather affects their operations (and bottom line), I believe more of them will reach out to weather vendors or consultants for their needs.

I think there is plenty of business out there for weather consultants.  But it requires some major “thinking outside the box.”   I think you need to demonstrate to a lot of companies what “value” your weather services can bring to them.  They want to know two things:

1) How you can save them money?  or 2) How you can make them money?

Here’s what I would do first.   I would pick a focus.  Do you like forecasting the weather for Agriculture? Or maybe you like drinking wine and Vineyards would be a great sector within Ags?  This is a huge market and very fragile one given how many farmers, producers, end-users of ag products depend on the weather.  Plus it’s their livelihood at stake.

Or maybe you like helping small to medium sized businesses?

For example, do you know someone personally that owns a retail shop…or perhaps an ice cream company, a golf course, or maybe a construction company  (any small to medium size business that depends on the weather)? Have them sign on to your weather service for “free”.   Free clients are great in the beginning.  You can put them in your “portfolio” as a client and you can showcase what value you bring to them to present to other potential “paying” clients.

Now what will your weather service be?   Well, I think you should start by having conversations with these businesses.  Ask them how the weather affects their bottom line?  Would knowing the weather ahead of time be able to plan their operations more efficiently?  Or perhaps they may need to be alerted of severe weather in the area?  Or additionally they might need weather insurance solutions in case it “rains” and less people will come into their store?   You should have an answer to all of their “weather” issues, but have “solutions” that answer the two questions I wrote above.

Take them on for free for the first month…see how they like your product….and let them give you feedback.   I’m making this sound easier than is…because a lot of small to medium businesses do not want to waste time with you unless it answers those two main questions I wrote above.  So you have to be a very savvy people person.

However, before you give any client any of your products (even for free), I would highly encourage you to incorporate first and have contracts in place with all of your clients to limit your liability.   I would also highly encourage to speak to a lawyer who can advise you with how to set up your business (ie incorporation llc vs S corp, contracts, etc).   Or you can go to my buddy’s site at LawPivot.com and ask any legal questions you’d like.

Truth be told, I’ve never owned a weather consulting business and I can only speak from having heard from friends who have.  And they tell me the following:  There are ups.  There are downs. Sometimes business is good…other times they wish they had a stable job. It’s all part of being a consultant.  You have to find that right balance.

Bottom line, owning your own weather consulting business can be very lucrative if you can find a niche market, make a lot of connections, be an excellent customer service/sales person, and be able to maintain your client base for long periods of time.

Is there a risk in starting your own consulting business?  Sure.   Should you research and have clients ready to go before you officially start?  Yes, I would.   I would do your homework first about your market and pick up the phone and have conversations with business owners.  Or even better…go visit them in person.  Show them your sample products and what value you can bring to them.  Note their feedback.

And I’d personally recommend reaching out to other weather consultants who own their own business too.  Ask them questions and see what advice they have.  Owning your weather consulting business could be your first step into your new meteorology career!

Weather consultants out there…please feel free to offer your advice and thoughts about owning your own weather consulting business…especially in the early stages.  Students, Grads, and those opting for a new career in Meteorology need all the advice and insight they can get.  Thanks! (Photo credit: Lowenit.com)

I’ve received a couple of questions on breaking into Meteorology from graduates who received Meteorology degrees at various universities overseas.    And instead of staying in their own country or region, they are opting for a job in the United States.   Some of them want to understand what you need to do to break in.

In my opinion, I believe overseas meteorology grads have a better chance of getting into a research or programming roles in Meteorology in the United States.   There’s definitely less competition on that end of the spectrum.  In terms of operational meteorology, I believe you have the same competitive advantage as a US graduate…unless you have major connections in the industry that can get you through the door at various companies.

Honestly, I feel that if overseas graduates want to get into an operational Meteorology role in the US, they should stay in their country of origin or possibly move to another region.   Not because there are more jobs overseas….it’s mostly because there is less of a candidate pool.   Statistically, this gives you a better chance in getting a job.  As many of you know, the situation in the US is pretty dire as there are hundreds of meteorology grads pouncing on any entry level operational meteorology position that opens up.

Yea, it’s tough to swallow.  Believe it or not, there are opportunities available elsewhere where companies are having trouble finding qualified meteorologists.

For example, for those who are interested in energy meteorology and have operational forecasting experience (on the trade floor preferred)…there is an energy firm out in Germany that is looking for an energy trade floor meteorologist.  The position is in Essen, Germany…so if you’re interested in moving to Germany (or live near Germany), they want to talk with you.   Could be a great way to break into the energy business…and in this particular role, you would still be forecasting for cities in the US for their power business.

The downside for entry level candidates is they strongly prefer a candidate who has some energy trade floor experience…but it still doesn’t hurt to throw your hat in the ring if you feel like you are qualified and can prove to them that little training would be required.

If any of you folks are interested in seeing the job description, email me and I’ll get you the info and the name of the recruiter.   Just so you’re in the know…I don’t receive any kickback or anything from the recruiter…this is just purely to help out!

Now, back to my point on overseas students.   For those who are already here, and really want to try to break in…you’ll definitely have to compete with US graduates.    One potential benefit is you may be able to say how you understand weather on a more “global scale” depending upon where you lived overseas.  But even that is a little far fetched.     So you have to duke it out with the US students vying for an entry level opportunity.

As I’ve mentioned in my previous posts…continue to network.  Pick up the phone and call companies.  Try to tour their facilities.  Attend conferences.  Meet meteorologists face to face and follow up/keep in touch with them.   But make sure you are not annoying.  There’s a fine line between persistence and annoyance.   Most people will want to talk to you if you can bring some sort of value to them.   And for more useful tips for overseas students and how to break in…feel free to reference my buddy Tom Pagano’s blog post, here.

It’s official.  Winter is over today and we will start astronomical Spring 2012 tomorrow on March 20th.   As many of you know, it’s been an unusual and very warm winter this year.  In fact, many of you folks in the Midwest/East probably felt like “Winter” never came.  For some folks out West…”Winter” finally came over the weekend in terms of “snow” in the Mountains..especially in Northern California.  Too little too late.

The US overall had the 4^th warmest winter on record and 3^rd least snowy on record according to NOAA.  Meanwhile out West…it’s been dry and near normal in temperature overall.  California had it’s 2nd driest winter on record.   The only two states that were below average in temperature were New Mexico and Alaska.  Boston and New York City had their 2^nd warmest winter on record.  March is shaping up to the warmest on record in the US, too.   You get the picture. Does this pattern of unusual weather mean anything for what we can expect going forward?  Let’s turn our focus to forecasting the weather for Summer 2012 and it’s implications on the energy markets.

As I mentioned in my previous post, “Let’s talk Energy Market Fundamentals, Part 2” NYMEX Natural Gas price is getting crushed due to the very mild Winter we’ve experienced in addition to a major supply glut of Natural gas in storage.  Traders would have also told you “Winter” was over a long time ago..probably beginning in Mid January.   If the Summer ends up being milder than average…it could make for a very nasty situation in the Natural Gas storage market and for Natural Gas prices too.

With the very unusually warm start to 2012, I’ve only seen a couple of top energy vendor forecasts and most are more or less in agreement on Summer overall.  FYI… “Summer” in the trading markets is defined as June, July, and August as “Winter” is defined as Dec, Jan, Feb.  They are all pretty confident calling for a warmer than average Texas…a near to weakly above normal East, and a variable Midwest with near normal northern areas and weakly above southern areas of the Midwest.

For the west, pretty confident most vendors will lean cooler than average west coast, and warmer interior, especially Desert SW and Interior NW.  Some major vendors, like WSI, have not issued their official Summer outlook as of yet.

Energy mets will be watching the strength of La Nina going forward along with forecasts of major tele connections.  Most vendors will begin to run analogs of a record scorching March and warm Winter this year and see what the Summer looked like in certain analog years.   Some vendors mention the possibility of La Nina staying in weak La Nina/Enso-neutral territory through early Summer.  Others believe we could possibly head towards Enso neutral by early Summer and even towards a weak El Nino by the end of the Summer.   Where do you think we’ll end up?

If you’re interested in hearing more about the vendor Summer forecasts and their reasoning about it, you should definitely attend Earth Networks 7^th Annual Energy Weather seminar in Houston.   You’ll also get to hear from my friends at Earth Risk Technologies who say their product,“Temp Risk” was able to correctly forecast the unusually warm Winter far in advance.   Pretty awesome and am looking forward to hearing that presentation too!

From a trading perspective, I think Nat Gas traders are pretty confident that this Summer won’t compare to last Summer’s blistering heat and record setting heat waves…especially in Texas.  And I would tend to agree.

Expectations are super high for Nat Gas traders.  There needs to be durable heat waves in the Midwest/East and/or CAT5 hurricanes slamming the Gulf of Mexico Nat Gas facilities in higher frequency during the Summer.  Also, Colorado state is a major driver of “perception” for hurricane forecasting and they have delayed any quantitative hurricane forecasts until April 4^th 2012.

In regards to Summer…in my opinion the markets have already priced in a cooler Summer this year compared to last year (and given current Vendor forecasts for Summer),  traders will continue to be bearish on Nat Gas prices during withdrawal season.

We will wait to hear of any major changes/updates in Vendor forecasts…especially if any of them put much above’s in the forecast for the populated regions of the Midwest/East.  In my opinion, it’s not likely to happen until we’re quite close to Summer.

Remember, major weather vendors do move the market…especially when issuing Summer/Winter outlooks/updates by putting the perception out there in the market.   If the vendors stick to the “normal to weakly above normal” temperatures in their updates for the Midwest/East…then I think Nat Gas prices will continue to remain bearish (with supply overweighing sentiment) until we get closer to Summer.

What do you think Summer of 2012 will look like?

Knowing what you know today about the job market and where the future of meteorology is heading…would you advise your kid(s) to be meteorologists?  It’s a question that I’ve been thinking about given that I have a 6 month old son.

First, I strongly believe that doing what you love is important.  Doing something that you are passionate about and motivates you to get up every morning is what it should be about.  Of course it needs to be practical too because what you do needs to pay the bills and bring stability in your life.

Let’s face it…we spend the majority of our lives at work so you might as well enjoy what you’re doing.  It will likely make you a happier person at work and when you come home too.   I think that’s the reason why many of us became meteorologists….weather is something many of us are passionate about…and we pursued it as a career.

Now let’s go back to my question….would you advise your kids to be meteorologists?   My answer would be: If he is passionate about weather, then of course yes I would support him.   Would I be encourage Meteorology as a career given what I know today?  Probably not.  This may surprise some of you but I’d rather not sugarcoat what I believe!   I’d like to see some changes happen now (for the future) before I become pro-active about advising my son to pursue a career in meteorology.

Here are a few of the changes I’d like to see sooner than later:

1) Rotating Shift work burden:  We know weather happens around the clock…24 hours a day, 7 days a week.  And meteorologist(s) need to always be around to give weather forecasts.  It’s part of being a meteorologist.  However, there are a few companies out there easing the rotating shift work burden by letting meteorologists work from home a couple days a week.  I wrote a post about this very topic a couple of months ago.   Have a look, here.  I’d like to see more employers follow these companies and ease the rotating shift work burden for many meteorologists working long hours with rotating schedules for very little pay.

2) Better Pay:  A majority of meteorologists get paid very little money for the incredible value they bring to the table.  I guess you can say that a lot about our service oriented fields such as teachers, police officers, firefighters, etc…but overall I’d like to see a higher starting salary so meteorologists can make a better living for themselves and have greater stability.    It’s hard to fathom why an investment banker out of college makes $100-120k, while a meteorologist makes $20-35k.

3) More jobs:  Given that the weather affects almost every industry on the planet, I’d like to see more companies hire meteorologists to support their operations.   Not just weather-oriented companies…but large retail, construction companies, hedge funds, etc.  As I’ve mentioned in my post on the “Future of Meteorology”…weather risk is going to be (and currently is) very important for a company’s bottom line.  Instead of checking the internet for what the weather is going to be…I’d prefer if these companies hire professional meteorologists to help increase operational efficiencies.   I’d personally like to see more “forecasting” jobs rather than programming jobs.

Also, there is some concern in the meteorological community that in 20 to 30 years computer models will take over human forecasting ability.  And that companies out there are “over modeling” to a point that meteorologists will not be needed.   In my previous post of “Will computer models take over Wind meteorology”…I have made the case that employers should still keep the human level of analysis and communication intact.   But it definitely is a concern for what the future will bring.

Another concern is budgets being cut at the NOAA/NWS because the government needs to “spend less”.  If the US continues to take on more debt, what does that mean for the future and stability of government meteorologists that are so pertinent to saving lives?  I truly hope that the government has the foresight to keep the budget supported at NOAA.

I was recently asked a question on my blog about the possibility of making six figures in meteorology within 10 years.    “Brock” is only 15 years old and his/her goal is to make $120k after 10 years of working as a meteorologist.  Kudos for knowing what Brock wants at such a young age!  Bottom line, Brock wants advice on whether to pursue Meteorology since he/she is very passionate about weather but doesn’t want to stress through, burn out, and come up empty handed in this field.

From what I have seen…it is possible to make $120K in some meteorology sectors within 10 years.  But honestly, the majority of meteorology sectors…it’s very rare to do it that quickly.  I’d say top energy trade floor mets along with large market TV mets are the highest paid in the industry. But there are only a handful of these folks who have made it happen within 10 years.  I’ve written a post about six figure salaries in meteorology, here.

In order to prepare for a career in meteorology, I’d advise young folks to start ramping up their programming and database modeling skills.  In my earlier post of “Is Meteorology turning into Computer Science”…I feel that it’s the direction we are heading towards.   And as I mentioned in that same article…many of the entry level jobs today are companies looking for meteorologists who are also programmers.

Young folks in junior high and high school should also start connecting with meteorologists in the workforce right now.   If you’re interested in Meteorology, I think it’s important to establish pertinent connections in the space sooner than later.   I think it’s even more important to find a Mentor that can help guide your decision making for the future and keep you abreast of the latest trends in Meteorology too.

Looking back, I think it also makes sense to have a back up plan when pursing a career in Meteorology. Perhaps that is a secondary degree in another field (economics, finance, computer science, etc).  Or potentially an MBA post- meteorology degree.  It’s always nice to have something else to fall back on in case meteorology does not work out.

And for those folks who are interested in meteorology as a career and are in junior high or high school…make sure you are passionate about weather before entering this field.  It will be your passion for weather that gets you through the bumps along the road!  Meteorology can certainly be a rewarding career, but financial planning is also very important.  Don’t get me wrong…the future of meteorology is still bright with lots of fascinating things happening in the space…but I’d like to see some more positive changes for meteorologists overall!

Would you advise your kids to be meteorologists knowing what you know today?  Let your voice be heard loud and clear! (Photo credit: bemidji.k12.mn.us)

Weather forecasting for the agricultural community is nothing new…but agricultural meteorologists are growing in numbers due to the large demand in hedging for weather risk.  In my previous posts, I’ve talked about the different paths of meteorology you can take…from TV, Energy Trade Floor, Wind, Solar, Aviation to Marine meteorology.   Today, I’d like to spend some time discussing the importance and rise of Ag Meteorologists!

Agricultural Meteorologists generally work at large/small corporations or small consulting shops, hedge funds, (or for themselves) and provide short, medium, and long term weather forecasts for farmers, food companies, hedge funds, energy companies, and traders…among others.  Bottom line, Ag meteorologists are analyzing and forecasting any weather phenomena that poses a risk to their crops.

Ag meteorology is a fascinating business to be in.  Weather is a HUGE driver of price that affect most commodities traded on the CME exchange (Chicago Mercantile Exchange).  From Oranges to Coffee Beans or Corn to Soybeans…each commodity has it’s own risks and variables that a meteorologist has to understand.   In addition to global supply and demand principles…Ag meteorologist should understand how certain weather conditions affects each individual crop to the slightest detail.

Let me give you an example.  I have a friend who lives in Merced located in the “agricultural heartland” of California—the Central Valley.   He grows Almonds.   In the winter time, they are constantly checking the weather to see If the temperature will dip below 28F at anytime of the day to avoid frost damage and a total wipeout of their crop.

Between 27F and 28F…there is still a chance that the Almond crop will survive.   Under 26F, it is likely that  (within 24-48 hours)…the crop will be totally wiped out from frost.  And wind and moisture also make a difference, too.    And it could potentially ruin livelihoods for that year if proper precautions are not put in place by the farmer just for that one single day (or hourly period).   That’s how fragile the weather is for Almonds and how accurate meteorologists need to be when forecasting for these guys.  And each commodity has their own example of their own individual thresholds, too.  Pretty cool stuff!

Agricultural Meteorologists also forecast for hedge funds and traders.  Why?  Perhaps Hedge funds want to speculate on the price of Corn and they buy Corn Futures or Options on the CME exchange.  They’ll hire Ag meteorologists (or companies) to monitor the weather risk to the global supply of Corn.  Keep in mind…that corn (and other commodities) are “global commodities”…and the US weather is just one piece of the puzzle affecting the price of Corn.  It’s based on worldwide supply and demand…and so Ag meteorologists need to be familiar with weather phenomena around the world where Corn (for example) is produced.

Many energy companies also utilize Ag meteorologists.  One example is how Corn is used to make Ethanol…which many of you know one use case is a fuel used in some of today’s cars.  Knowing the supply/demand of Corn based on weather fundamentals can help vary the price of Ethanol on the market which some energy companies would be concerned about.

Bottom line, agricultural meteorologists are extremely important and valuable in today’s economy.   They make a direct impact on livelihoods for farmers, and can be helpful in hedging risk for hedge funds, traders, food companies, etc. I believe there is definitely a future for Ag meteorologists and I would put Ag meteorologists in a “growth area” within the future of meteorology.  By the way, there are some schools that offer a Masters or PHD in Agricultural meteorology including Iowa State and Purdue University, to name a few.  Great options to get your feet wet from an educational perspective if you’re specifically interested in Ag meteorology.

Some companies that have Agricultural meteorologists on staff are WSI, Commodity weather group, Chesapeake Energy, MDA EarthSat Corporation, Accuweather, Televent DTN, government entities (NOAA, DOA).  If I’m missing any (I know I am) or if you’re an employer thinking of hiring for an Ag meteorologist…feel free to put your company name and contact info in the comment box below.  And as I said before, there are many Ag meteorologists working for themselves and have their own consulting firms.  Would also love to hear any perspectives of Ag Meteorologists out there!  Thanks….

Last week was quite a devastating week of severe weather.  As we all know, some very strong tornadoes in America’s heartland took the lives of 39 people.   And not very long afterwards, a snowstorm hit parts of the tornado ravaged areas making the disaster relief effort quite challenging.

Prior to the twisters touching down…I was paying close attention to all the tornado warnings being issued by the NWS.  And I’d like to commend the NWS and broadcast meteorologists/weathercasters for working tirelessly to issue and communicate pertinent tornado warnings to save as many lives as possible.   Even the bloggers and tweeters that further communicated those warnings to many residents also deserve a lot of credit.  There were many lives saved thanks to all of you.

There are many tornado victims without homes today…and thousands without any power.   Many local businesses and livelihoods have been destroyed.  Please join me in supporting the disaster relief effort by donating to the American Red Cross.   Here is the American Red Cross link.

Or you can always donate to any of the following charities supporting the disaster relief listed here.   God Bless!  (photo credit:ARC)

In Part 1 of yesterday’s post, I discussed the energy market fundamentals of retail gas and Crude Oil.  Now, here’s my honest assessment of Natural Gas.   Natural Gas has been battered in this market.   Due to the Shale Gas revolution along with mild weather…NYMEX Natural Gas prompt month is trading near $2.53, up from it’s 10 year low of $2.21 this past “Winter”.   It’s hard to believe, but during the Hurricane Katrina days, Natural Gas prices were near $13.

With Natural Gas prices so low, it actually puts a strain on a lot of other markets.  For example, power (electricity) prices are a function of Natural Gas…and therefore many power markets around the country are depressed.   With power markets depressed and power prices so low…nobody “wants” to write PPA’s  (Power Purchase Agreements) at these levels.   And yet having a executed PPA in hand is crucial for any renewable energy developer/marketer.

For example, those who own renewable energy facilities want to be able to sell their power for an “optimum” price…and the power prices today have just been battered with Natural Gas prices…especially here in California.    So there isn’t a “real” demand for renewable energy when Natural gas is so cheap.

Natural Gas, especially combined cycle Natural Gas plants, are a clean and efficient form of “conventional” energy that does not require how much “sunshine” or “snow melt” or “wind” is produced to determine output.  It makes sense for a lot of utilities to use conventional forms of output given how cheap and reliable they are (ie Natural Gas).

The only reason that many renewable energy facilities (wind, solar farms, etc) are being developed in this market environment is for the Federal Tax Credit (and to satisfy California’s 33% RPS mandate).   Otherwise, most companies would not want to build or sell renewable energy in this environment because it’s not economical and/or favorable.  The Federal Tax Credit is spurring a glut of renewable supply, yet there is no focus on demand.

Trust me, I’m all in favor of building a renewable portfolio in conjunction with having stable and cleaner form of conventional energy output.  But when you have a multitude of projects (adding to supply), and no focus on the demand element…you can essentially set up a recipe for disaster.   On top of that, grid integration costs are high from the Utilities and that puts a large dent into the economics of building a renewable energy facility in today’s market conditions.  And perhaps this poses another problem…are we building enough transmission to handle all the incoming renewable projects?  Or are we going to face massive amounts of congestion in the near future?

With the mild weather we’ve had this winter, Natural Gas storage is also a major concern.  We’re about 41% above last year, and 40% about the 5 year average.  Current inventories are near 2.6tcf….record highs for this time of year.

In my opinion, we’ll probably need to have Summer heat waves last 4 weeks and about 3 Cat 4-5 hurricanes slam into Gas facilities in the GOM to make a sustained dent in Natural Gas prices.   If we have a mild Summer and no major Hurricane hitting the GOM…storage facilities may have to start paying companies to take their gas out of storage.  Yes, it could be that bad.

We need to start using our Natural Gas (and reduce production)…or prices are going to be depressed for quite some time. I’d like to see Natural Gas prices in the $4-$5 dollar range.  And with the current supply glut of Natural Gas….here’s how I think we should do it:

1) Reduce drilling of Shale Gas:  I’d like to see a temporary reduction on drilling…perhaps during maintenance season is the best time.  Some producers have said and already have begun reducing their output which has led to a temporary “dead cat” bounce of Nat Gas prices.  But we need more.

I know it’s painful for producers, and many are required to drill based on their lease agreements.   I understand that some producers are focusing on liquid rich plays (Propane, Ethane, Butane)…but that also produces a lot of gas.   The only other thing that may stop ya’ll from drilling are “freeze-off’s”…but with the “winter” we are having…forget about it!

2) Start using our Natural Gas domestically:  It would make sense to me if our trucks, buses, delivery vehicles, shuttles, taxis all ran on CNG.  I think we should continue to push to use Natural Gas for transportation.   It’s cleaner with near zero emissions and (I think) the most effective and practical solution for large vehicles on our roads.   I believe in the Pickens Plan for Natural Gas

3) Export our Natural Gas:  Since we have a huge supply glut of Natural Gas, we should continue to explore ways to increase our exports of Natural Gas.   I understand Cheniere is converting it’s Sabine Pass facility to do exactly this, but from what I understand it has some credit issue to overcome.

Some folks in the government are talking about a “Natural Gas export ban.”  I think it is wrong. Natural Gas should be looked at as a global commodity which should be allowed to be sold to any country (both FTA and non FTA countries) requiring it.   Sure, there should be some regulation on how much US Nat Gas is leaving the country…but there shouldn’t be a ban.

Bottom line, I am hoping Natural Gas producers can continue to curtail some production (more than the approx 1Bcf/day that is happening now) and we start exporting/utilizing our own domestic Natural Gas here at home.    Otherwise, we’re going to keep seeing depressed prices for a while! (Photo credit: Propurchaser Blog)

With average gas prices hitting more than multi-year highs this week…I’d like to take a break from writing my career weather blog posts and spend some time giving ya’ll my honest assessment of the current energy market fundamentals impacting gas prices.  Today I’ll specifically discuss Retail Gas and Crude oil.

According to the EIA, Retail gas prices are the highest since June 2011 on a nationwide basis ($3.73) and California prices are at the highest levels since July 2008 ($4.29).   The current all time nationwide record is $4.11/gallon. In California, there have been a couple of refinery snags to propel gas even higher…but it honestly could be a lot worse.  Europeans pay a ridiculous amount for gas per gallon…it’s mind boggling!  For example, in London, England a gallon of gasoline will cost you approximately $9.85/gallon today.   Imagine filling up a Range Rover at that price point…ouch!

Here’s what is also interesting…gasoline demand overall is declining in the US.  In fact, the EIA said average gasoline demand in the US fell last week by 6.2%.  And US Gasoline demand is still down 6.7% year on year.   So, then why are retail gas prices continuing to inch higher?  The answer is high Crude oil prices.

WTI Crude Oil (Crude delivered at Cushing, OK) is currently trading near $107/bbl.  Brent Crude (Crude delivered in the North Sea) was trading near $122/bbl.  As we all know, in many cases the price of these commodities is determined by supply and demand fundamentals.   But this current rise in Crude is mainly due to one fundamental that I like to call “Fear Factor.”

Tomorrow, I’m going to upload:  “Let’s talk Energy Fundamentals Part 2.” I’ll be talking about one of my favorite commodities, Natural Gas!  Stay tuned! (Photo credit: whatamimissinghere)