Meteorological Fall Means Weather Losing Gas Market Clout

Summer is over. At least, meteorological summer in the Northern Hemisphere is over.

It ended Aug. 31. The calendar will catch up on Sept. 22, when the sun crosses the celestial equator at 10:29 p.m. New York time.

The transition to autumn in the Northern Hemisphere has been under way for weeks. Yellow warblers, for instance, long ago pulled up stakes in the northern U.S. and headed south for the winter.

For natural gas traders, the seasons are changing, too, though they often refer to the next few months as the “shoulder season,” a time of year when weather loses some of its gusto where energy markets are concerned.

Here’s how it works.

Energy demand is calculated by a heating-degree days value or a cooling-degree days value. Each works off a base of 65 degrees Fahrenheit (18 Celsius).

To find the cooling factor, you subtract 65 from the daily average temperature. To find the heating side of the equation, you subtract the daily average temperature from 65.

So, if the average temperature on a summer day was 85, the cooling-degree day value was 20. If, on a winter day, the average was 30, then the heating-degree day value would be 35.

The higher the number, in theory, the more energy is needed to cool or heat a home or to bring it to a comfortable level of 65 degrees.

Shoulder Seasons

In a shoulder season -- spring or fall -- all of this becomes a little moot.

Need proof?

For Sept. 15, the daily average temperature in Manhattan’s Central Park is 68 degrees. So, if everything averages according to the 30-year normal, you get a cooling degree day of 3.

On Oct. 15, the daily average temperature in the park is 57. This gives us a heating degree day value of 8. A little more impressive, yet neither one is really indicative of an overwhelming demand for electricity to power air conditioners or natural gas to heat homes.

This is why it’s called the shoulder season, because it’s that time of year between the high heat of summer, which sparks a jump in demand, and the cold nights of winter that draw off even more energy.

In the U.S., most natural gas is burned in the heating season -- December, January and February being the worst three months.

So if you are trading natural gas and someone tells you the daily average temperature in New York for Oct. 15 is going to be 8 degrees above normal, you’ll know that the net result may be nothing much happens because the reading for the day will be 65.

That’s a zero on the energy demand scale.

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