Recently, we have been looking at ways to modify Cooling Degree Days to make them apply more directly to natural gas demand in summer. Our analysis has shown that while CDDs are no doubt a useful measure for energy demand, they can be fine-tuned slightly better for direct natural gas application. 

Below we show the most recent 7-day forecast from the National Weather Service for Cooling Degree Days across the continental United States. This is updated daily on our site, and focuses on the 9 census regions while giving an overview for the entire United States. To see a list of which states are in which census region and for a key on how to read this table, 

(Click on image to enlarge)

As can be seem, national CDDs will be 8.82% (or 6 CDDs) above average across the continental United States through the coming 7 days, with demand most above average in Region 6, which contains Texas, Oklahoma, Arkansas, and Louisiana. This also happened to be the highest census region for natural gas demand in July 2015, accounting for 27.2% of all natural gas consumption. The expectation of heat returning to this part of the country is part of what has helped natural gas prices rally over the last couple of weeks. 

In fact, we compiled natural gas consumption data since 2001 to see broadly what to expect. Below we show in July 2015 what percent of total natural gas consumption each census region made up. 

The major players are Census Regions 5, 7, and 9. Census Region 5 has Florida, which has been consuming natural gas at an increasing rate during the summer over the last decade; Census Region 7 has Texas which has always been the largest natural gas consumer in the country, and Census Region 9 has California, which is the second largest natural gas consumer in the region. Meanwhile, we can see that Census Region 1, New England, makes up a very small percentage of national demand in July (only 3.3% last year). This makes a heat wave over the South that much more important as compared to one over New England. 

By combining this analysis of historic consumption with CDD forecasts from the NWS, we are able to get a good sense of exactly how much demand will deviate from averages. Using the July 2015 benchmark, weather-driven demand with these CDDs would be 7.3% above seasonal averages. This is quite close to the national CDD deviation as well, though it can deviate more depending on exactly where the most extreme temperatures are. Going even further, by applying that to 6-10 and 8-14 Day forecasts from the Climate Prediction Center, we are able to also get a good sense of exactly where the largest bullish and bearish risks to natural gas demand are in the long-range. Not all of this natural gas consumption is as weather-driven as other, of course, as there are various uses for the fuel, but much of this consumption is at least partially weather-determined. 

A historic look does indicate some rather dramatic variations are possible in some states and regions, and recently Census Regions 5 and 6 have consumed much more natural gas than they did in the last decade, meaning they will have further weight in our weather forecasts moving forecast. This is best seen below, where we have plotted the percent of consumption each census region has taken up in July since 2001. 

While August deviates slightly, the largest deviations can be seen between summer and winter. In winter months, as would be expected, census regions further north can make up a larger percentage of national consumption, indicating a need for us to shift the focus of our forecasts to major consuming regions. For now, though, the South, Southeast, and West appear to be the major consumers, with residual demand still relevant across a smattering of other states and regions as well.