Posted: August 29, 2025, 12:50 pm

Last week we mentioned that electricity prices are going to replace gasoline prices in the kitchen table politics speak as prices continue to rise. We know the arguments, data center load growth, renewable energy increasing capacity, etc.

One area where costs are certainly rising, and has gotten less attention, is the increase in transmission. We’ve stated in the past that some ridiculous amount of our grid is over 25 years old and will need to be replaced or upgraded in the near future. Somewhat amazingly, this is something that all sides agree on, but who should pay for it, well this becomes a little more contentious. Look no further than MISO. MISO has been proactive in approving upgrades in their long range transmission planning. In 2022 they approved $10 billion in upgrades in a Tranche 1 portfolio consisting of 18 projects. Late last year they approved Tranche 2 consisting of 24 projects with a price tag of $22 billion.

$22 billion is a big price tag, and because MISO is classifying it as “multi-value”, everyone shares cost. As might be expected, there are some states that aren’t exactly pleased with this arrangement. At the end of last month, the Public Utility Commissions from Arkansas, Louisiana, Mississippi, Montana, and North Dakota filed a complaint with FERC asking to have the projects reclassified which basically would exempt them from regional cost sharing…or everybody pays. The states’ contention was MISO overestimated the benefits when modeling which would require cost sharing. Interestingly, earlier this year, MISO’s own market monitor agreed that the dollar value of the long-term benefits was way overvalued. This became so contentious that MISO filed a petition with FERC allowing them to ignore their own market monitor. This is becoming a made for TV special, and we are in the early episodes of the current season.

Our point in mentioning the MISO drama isn’t to choose sides, rather, we are pointing out that even the one thing that everyone agrees on, we need more transmission, isn’t easy. Electricity is going to be the new gasoline and get ready for it to be plugged into politics.

Typically we give oil production only a brief glance, but this morning the EIA released oil production numbers for June and they were a record 13.50 million bpd. US oil and gas production have a strong correlation as gas is a byproduct of oil drilling. In the latest Short Term Energy outlook, EIA predicted natural gas production would fall slightly or stay level even as oil production falls with lower prices. This was due to some regions of natural gas specific regions like Haynesville and Appalachia increasing production which would offset any decline with oil production.

Below are three charts natural gas traders are watching. The first is the gas production followed by the historical storage levels of the US and the EU. The EU chart is a difficult to decipher, but it reads storage at 76% and in the range of the pervious five years which mirrors the US. Right now natural gas appears to be in supply/demand balance. Until fundamental conditions drives a change in one of these charts, it’s a fair assumption to assume natural gas trades sideways.