Thursday, August 23, 2012

It's Hot Out There

The National Oceanic and Atmospheric Administration reported that July 2012 was the hottest month ever on record for the lower 48 states.  Ever!  The average temperature was 77.6 degrees, which was 3.3 degrees warmer than the average July temperature for the previous century.

The map above is pretty astonishing and certainly underscores all we've heard about the devastating drought U.S. farmers have experienced this year.  The high temperatures, combined with a reduction in natural gas production and drilling, has helped keep a lid on natural gas storage and has given some support to prices.  Given the suffering the heat has caused, I hate to look for silver linings...but the heat certainly provided one for natural gas.

It is pretty amazing, but looking back to April 5, 2012, the storage level was 60.5% above the five year average.  Last week storage was only 12.1% above the five year average.  I rank that as a significant development.  No doubt that it has been painful on many fronts to get to this level, but it's not something I thought would be achievable without some kind of external factors.  Here is what it looks like graphically from January 2012:


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