Posted: August 14, 2026, 11:45 am

STEO!!!

Summer vacation season is in full ramp, and that includes WPO staff. That said, this week the EIA Short Term Energy Outlook for August was released and we couldn’t help take a look. Since it is vacation for all, a couple quick points.

When the STEO is released, we turn to electricity commentary first…kind of like turning to “Faces In the Crowd”….kudos if you get the reference. Anyway, the headline for electricity for EIA this month is taking their Texas, or basically ERCOT, 2027 electricity growth from 14% to 6%. The reason, Governor Abbott’s moratorium last week announcing a pause on new data center projects until the PUCT can answer a few questions.

Coal Haul

Another stop for us in the STEO is always the coal numbers. We are usually interested in stockpiles as we head into fall and winter as the electricity futures market glances at it every so often. That usually leads us to the railcar loadings data, but since it’s vacation week, not happening. What we did find interesting was a chart of coal exports that is trending higher. Some of this is probably steam coal generation being used as replacement for LNG given the shipping difficulties in the Middle East.

Steam coal is on an annual run rate north of 40 million short tons being exported this year. For some context, the US burned about 400 million short tons in 2025 for its own electric generation annually.

Natural Gas Market Commentary

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Natural gas futures continued to trade rangebound this week, with the curve gaining modest ground even as inventories further separated from the five-year average and production shows some new signs of life. The September 2026 contract is on track to finish the week modestly higher, along with the Winter 2026-27 strip. The market continues to digest mixed signals, although the bullish case is getting harder to make beyond the next several weeks.

Lingering heat is now expected across the majority of the country deep into August. The strongest anomalies remain focused on Texas and the Southeast, which largely avoided some of the hot weather experienced earlier in the season. This is helping to keep a floor under the market, but hot weather events so far this summer have failed to yield proportional increases in gas consumption. Inventories have continued to build the surplus to the five-year average throughout the season. Further, the clock is ticking on the cooling season, with fall coming squarely into focus.

LNG export demand is expected to recover and likely hit new record highs as cooling needs wane, but this could be mostly offset by new production volumes. Output had been stuck near 110 Bcf per day for most of 2026, but newly minted pipeline capacity flowing out of the Permian seems to have led to a direct uptick in production. Estimated volumes have pushed toward record highs near 113 Bcf per day at times in August, and the trajectory appears to be pointed upward. If this continues, the market should be able to absorb the uptick in export demand without materially tightening the fundamental balance.

Overall, the market appears to be in great shape to ride out the clock on the dog days of summer. The uncertain winter looms in the distance, but for now, the natural gas market appears to be entering a period of reduced risk.

Cocktail Corner-Dog Days of Summer

It’s the time of year where someone at the BBQ will mention that it’s the dog days of summer…usually after an awkward exchange about the weather with someone you just met.

Ask most people the origin of “dog days of summer” and you might get something along the lines of ‘because we feel lazy and sleepy and want to lay around like fido in the afternoon shade’. It seems plausible and makes sense, but there may be a little more to it. There are a couple interpretations, but we kind of like the astronomical. In the late summer, the star Sirius is the most bright in the sky, second only to the sun. Sirius is the centerpiece of the constellation Canis Major, or the Greater Dog, thus when the dog shows up, it’s the dog days of summer. By the way, in some parts of the country the dog days are over as Sirius was brightest in July….go figure.

As a public service announcement. Should you find yourself in this conversation, the BBQ has turned out exactly or much worse than you expected. While we don’t condone excess alcohol consumption, it might be time for another drink. Also, look around for that Dr, Rick guy, you might be in a Progressive Insurance commercial.