Plentiful natural gas predicted for winter
28.08.2008 11:02
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- Source: toledoblade.com
What a difference a summer makes. Natural-gas prices, which were 50 percent higher in May than they were a year earlier, have dropped so much that early fears of a winter of high prices and short supply are melting away. A milder summer, strong production of the fuel, a slow economy, and forecasts for a mild early winter have pushed down prices and spurred talk by some analysts of a natural-gas glut. "You have a combination of two things: some milder-than-normal summer weather and also we're anticipating an 8 percent increase in natural-gas production over last year," said Neil Durbin, a spokesman for Dominion East Gas Co. in Cleveland. "It has had the effect of moderating prices." The forecast is key because thousands of people in northwest Ohio and southeast Michigan use natural gas as a heating fuel in their homes and businesses. On Aug. 15, gas in storage for the winter totaled 2,655 billion cubic feet, down 9 percent from last year's total, according to the U.S. Energy Information Administration. But the amount is 1 percent higher than the five-year historical annual average for stored gas. Analysts expect production to increase by 8 percent and consumption to increase by just 3 percent this year. "In general, the wholesale market prices have been declining," said Amy Sweeney, an analyst with the federal energy administration. "There is more gas in storage than had been expected." At the start of May, gas supplies totaled 1,436 billion cubic feet, compared with 1,842 billion cubic feet a year earlier. Concerns about a hot summer fueled speculation that power users would gobble up natural gas to fuel special electricity generators. The sluggish economy is a key suspect in the slipping demand. When Columbia Gas of Ohio submitted its customer rate for September of $1.09 per hundred cubic feet, the request was the biggest month-to-month decrease - 26 cents - since the utility began filing month-to-month rates in 2004. Dominion East, which serves Allen County and nearby areas as well as most of northeast Ohio, had a similar month-to-month drop. Its September rate is $1.07 per 100 cubic feet, down 39 cents from its August rate. Predictions of a cold winter also seem to have changed. A forecast issued Aug. 21 by the National Weather Service's Climate Prediction Center called for "above-normal temperatures across a broad swath of the U.S." from September to November. That could allow many consumers to delay turning on their heat until December. Barring a sudden disruption, as occurred in 2005 when Hurricanes Katrina and Rita knocked out much of the Gulf Coast's natural-gas production, supplies look strong for the winter, experts said. "Is there going to be a glut? Probably not. But there will be enough," said Jim Halloran, an energy analyst with National City Private Client Group in Cleveland. He advises clients to seek a variable rate from gas suppliers or alternative marketers this season because fixed-rate contracts seem somewhat overpriced. Many of the independent suppliers in northwest Ohio are selling natural gas for $1.30 to $1.40 per 100 cubic feet, according to a survey this week compiled by the Public Utilities Commission of Ohio. There is another alternative. About 63,000 metro Toledoans belong to a bulk-buying group called the Northwest Ohio Aggregation Coalition. The group has a fluctuating rate, which is 4.2 cents lower than that month's rate from Columbia Gas. There is "an awful lot of production out there" which could apply further pressure to drive down natural gas prices, Mr. Halloran added. Contact Jon Chavez at:
jchavez@theblade.com
or 419-724-6128.
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