As Winter Approaches, Natural Gas Prices Reach Record Highs
By Jad Mouawad
THE NEW YORK TIMES
Natural gas prices set a new record on Thursday, pointing to sharply higher heating bills for a majority of Americans this winter and soaring costs for makers of energy-intensive industrial products like plastics and chemicals.
Since the beginning of the summer, the price of natural gas has doubled. But unlike crude oil or gasoline, whose recent price increases have been widely felt by most Americans, the price surge in natural gas — the most popular source for home heating across the colder regions of the country — has so far gone largely unnoticed.
That is about to change as colder weather sets in. After the hot summer pushed up natural gas consumption by electricity companies, the prospect of a harsher winter than last year on top of two devastating punches to the nation’s energy hub in the Gulf Coast has led to a significant tightening of natural gas supplies. And unlike petroleum, which can be readily stored in bulk for long periods of time, there is no National Gas Reserve to turn to when shortages arise.
“It’s still under most people’s radar screen right now,” said Carl Neill, an analyst at Risk Management Inc., a natural gas consultant and brokerage firm in Chicago. “The public has absolutely no idea how high prices are going to be this year. It’s going to be mind-boggling.”
According to recent estimates by the Department of Energy, Americans are likely to pay roughly $400 more for their natural gas this winter than last year, with average bills jumping to $1,130. Many analysts, however, warn these figures might prove too low and are likely to get updated when the government issues its winter outlook next month.
While commercial stockpiles of natural gas are currently above a five-year average, prices are now being driven by the uncertainties surrounding the impact of Hurricane Rita on energy installations in the Gulf of Mexico.
Natural gas prices for November delivery closed at $14.196 a thousand cubic feet, a gain of 9.6 cents on the New York Mercantile Exchange. Crude oil rose 44 cents and closed at $66.79 a barrel.
Natural gas now costs more than three times its average of $4.70 between 2000 and 2005 and seven times the 1990s average price of $2 a thousand cubic feet.
President Bush, who called on Americans earlier this week to conserve gasoline by driving less, did not mention natural gas in his remarks.