NEW YORK (TheStreet) -- Last week, the U.S. Energy Information Administration released its latest Short-Term Energy Outlook, carrying the implication that electricity bills will be bumped up as an effect of global warming. That could be good news for stocks like Public Service Enterprise Group (PEG) and other big utilities still smarting from grid investments made post-Superstorm Sandy.
This report once commanded much investor attention and typically moved energy markets. Today that's not really the case. The report often seems to get lost in a myriad of geopolitical news briefs focused on events such as the latest unrest in Iraq which typically (and rightly) trumps any projected electricity analysis.
I don't want to downplay the importance of updates out of the Middle East or even the social unrest occurring outside the stadiums at the World Cup, but I do think it's a shame we don't take more notice of analysis coming from the EIA. Much like the Fed, the EIA does "at times" give subtle DaVinci Code-like hints of where they believe the energy markets are headed.
The latest "hint" links the effects of global warming with electricity consumption. Utility companies like PSEG, NRG Energy (NRG), Con Edison (ED) and Duke Energy (DUK) could benefit. However, utilities will also be under increased scrutiny to meet that expected rise in electricity demand and to deliver power products retail consumers expect 24/7.
For the record, the EIA didn't blatantly state that global warming is going to wreak havoc on energy prices. However, based on the June 10 report, the EIA states that during the insanely bitter cold known as the Polar Vortex, electricity consumption jumped 5% more than the same period last year. Scientists have speculated that increases in global temperatures have fueled changes in the polar vortex, a circular pattern in the jet stream around the North Pole. Those changes created the bitter winter felt by much of North America.
Similarly, if the coming summer follows the recent trend, temperatures will be uncomfortably warm. The National Oceanic and Atmospheric Association reports April of this year tied with April of 2010 for the warmest on record globally. The EIA is forecasting that, even as prices have risen a relatively modest 2.6% on average the average each year since 2012, U.S. residential electricity customer will spend 4.9% more during the coming summer thanks to increased temperatures and higher expected consumption. The Northeast will be especially hard hit.