Making predictions in the energy world is a foolish effort. Anything can happen and upset expectations, turn “truths” on their head and ignite fear and uncertainty. The tragic earthquake and tsunami is Japan is a perfect example of that. I’m going to go out on a limb and try and lay out a few factors in current events that will affect energy pricing. I’ve shaded boxes green for a potential decrease in energy prices and red for increases:

Actual or Possible Event Energy Consumption Impact Energy Price Impact
Japanese economy nosedives, led by the manufacturing sector. Reduced demand from Japan. Japan is the world’s largest importer of liquefied natural gas (LNG), second largest importer of coal and relies on imported oil to meet 45% of its energy needs Short-term decrease as demand falls.
Global economy falls back into recession When the economy slows, energy demand weakens and prices fall. Conversely, higher energy prices can weaken the economy. Lower oil and natural gas prices, such as occurred in 2008-10
Japan need shuts and replaces some of its nuclear generating capacity. Gas-fired power plants will be able to take up some of the immediate slack left by shuttered nuclear plants.24 percent of Japan’s electricity is generated by nuclear power. Not all of Japan’s nuclear generation is going to go away, but some of it will eventually be replaced by oil and gas-fired power plants. Most of Japan’s LNG imports come from Australia and Southeast Asia, so US natural gas price impacts should be limited.  

Long-term increased imports of oil and LNG to Japan.
It’s too early to tell, but some nuclear power plants may be shut down for inspections. The NY Times reports that 23 US reactors have the same design as the stricken plant at Fukushima Japan. These include plants in or near Boston, Chicago, New Jersey, and Minneapolis. These plants are not likely to be permanently shut down, but there will probably be temporary shutdowns for inspections. Other power plants will have to compensate for any generation shortfalls from offline nuclear plants. Summer cooling season is coming and electricity prices usually rise even when nuclear plants are taken offline for scheduled maintenance. Electricity (and possibly natural gas) price increases are likely in certain markets, depending on the timing and length of plant outages.
Northeast Japan digs out, cleans up and is rebuilt over the next few years Rebuilding northern Japan will take enormous amounts of energy, not just to replace power plants but also for manufacturing of new buildings and consumer goods and fuel for construction vehicles Potential for increased oil prices in medium term as crude oil and diesel flows to Japan
Lack of a coherent energy policy sparks general fear about US energy supply & production options and choices. US natural gas production has very little to do with the global markets, but markets thrive on uncertainty and fear. Renewable energy could get a boost. Crude oil prices are weakening and gas prices are strengthening somewhat. In reality, anything could happen. It’s a wild card.
Libya consolidates under Khadafy Libya is currently a pariah and exporting little or no oil. If the rebels are routed, Libya could go back to being a pariah that exports oil. Japan has superseded Libya as the driver of fears in the oil markets. However, European markets are still high due to Libya.
Saudi Arabia has moved to help Bahrain crush dissent, driven by fears that the Shia population is being manipulated by Iran. Fear of Iranian influence is one of the unifying principles of the Arab world. This fear may lead to instability in Saudi Arabia and Kuwait, affecting oil production. If Iran is able to stir up more trouble in the Middle East (or is seen as doing so) oil prices will go up.

As economist James Williams writes on his Energy Economist website, “The outlook for the next 12 months: Oil prices $120 or $60.  As in 2008, both could happen.”

(For NY Times, see Experts Had Long Criticized Potential Weakness in Design of Stricken Reactor, March 16, 2011)