Energy prices fall while electricity prices rise due to oversupply but weak demand

Oil prices have been declining for the past three years, as well as gasoline, diesel, and natural gas prices. However, electricity prices are steadily increasing from 2013 to 2016, says Short Term Energy Outlook.

The Economic Times reported that Paris-based International Energy Agency expects oil prices to remain low for the next five years due to too much supply, but less demand, especially in developed countries. IEA expects the oil prices to go back to $80 per barrel by 2020. Crude oil future prices were at $43.87 a barrel on Monday. 

According to CNN, the IEA announced Tuesday that even though consumers are happy with the low prices of energy, it could lead to various energy-security concerns. The low prices are pressuring US shale producers, who mostly have cut investment budgets to keep up with the prices. Exploration and production spending has dropped 20 percent in 2015.

Meanwhile, Forbes tackled the fact that electricity prices are rising despite the drop in energy prices. According to the report, several wholesale price increases contributed to the increase in electric prices. During the last winter, the constraints in natural gas pipelines cause the New England power prices to increase for some months. In the previous winter, Polar Vortex resulted to the same wholesale power prices increase in the mid-Atlantic region.

The difference between electricity prices and other energy commodity prices was also reported by the US Department of Labor's Bureau of Labor Statistics in their Consumer Price Index.

"The electricity index has fallen 0.4 percent over the span, while the other indexes have fallen more sharply: Fuel oil has fallen 34.9 percent, gasoline has declined 29.6 percent, and natural gas has decreased 12.1 percent," according to the report.

The report also stated that the energy index went down 2.0 percent in August and dropped 4.7 percent lower by September. Gasoline index went down 9.0 percent in September after a 4.1 percent slump in August. The fuel oil index also went down 2.4 percent after an 8.1 percent drop in August. Meanwhile, the electricity index increased in August, but went down only 0.5 percent during the month of September.