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3 Ways El Niño Has Impacted the U.S. Energy Landscape This Winter

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How Will Hurricane Season Affect Energy Prices?With unseasonably warm temperatures across the United States, you don’t need a weatherman to know this El Niño event has been one of the strongest on record.

While El Niño continued strong throughout December, El Niño heat is believed to have peaked and is expected to gradually weaken in the coming months.

Here are three ways El Niño could continue to impact the U.S. energy landscape:

1. Natural gas consumption could continue to decrease

Last year was the second warmest year on record and the second warmest start to heating season. The warmer-than-average temperatures have directly led to a decrease in U.S. natural gas consumption.

As we’ve often discussed in the Weekly Energy Market Update, major natural gas consumption regions – such as the U.S. Northeast – have seen lower natural gas use in recent months, contributing directly to historically low prices and record levels of natural gas in storage.

2. It could affect hydroelectric output in key regions

While natural gas consumption has generally decreased nationwide, in certain regions – like the Pacific Northwest – natural gas consumption actually increased in 2015.

Why? Because the extended pattern of warmer and dryer air prevented snowpack from forming in the spring, causing a shortfall in hydroelectric generation and increased reliance on natural gas-fired generation throughout the summer and fall. 

Hydroelectric power usually makes up the region’s largest share of generation, which was the lowest in five years this past summer – about 32 percent below average. El Niño has the potential to exacerbate the warmer and dryer conditions this winter, but so far snowpack levels are above normal

3. El Niño winter storms could cause further power outages

While El Niño has brought warmer weather, it has also fueled harsher winter storms, prompting flash flood warnings and power outages across the country. Last week, thousands of Californians experienced power outages from El Niño-charged storms.

According to the National Oceanic and Atmospheric Administration (NOAA), El Niño will gradually weaken and return to near-normal weather conditions in late spring or early summer. However, severe winter storms are still in play.

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Stay tuned to the Direct Energy Business Blog for more weather updates. For more information on how weather factors are impacting natural gas and electricity prices, please watch the Weekly Energy Market Update.

Posted: January 14, 2016

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