Natural gas prices hit record high

Wednesday, September 6, 2000 By Michael Davis, Houston Chronicle

Blistering heat in the United State's midsection sent natural gas prices to record highs Tuesday.

The price run-up reflected surging demand for gas from utilities producing power at peak levels to, among other things, run air conditioners.

Consumers in Houston and other parts of the country are likely to be paying more for natural gas and power year-round because summertime natural gas use is growing.

Gas prices now peak twice a year, during the coldest and hottest times, and utilities are ratcheting up fuel surcharges to reflect this trend.

The heat wave is putting added pressure on natural gas prices that were already rising due to fears that the nation will not have enough gas in storage this winter to meet demand.

Natural gas on the New York Mercantile Exchange traded Tuesday for the highest price in the 10-year history of the natural gas futures market.

The October contract closed at $4.95 per thousand cubic feet  the highest near-month contract ever. The December contract closed at $5.10 after reaching $5.11  the most expensive natural gas contract ever seen on the Merc.

Reliant Energy HL&P and Reliant Energy Entex, Houston's electric and gas utilities, have both increased their fuel-charge adjustments in the past two months to pass on higher natural gas costs.

HL&P bills are estimated to be about 12 percent higher than at this time last year because of fuel fees. Entex bills will run about 20 to 25 percent higher this winter, depending on how cold it gets.

HL&P experienced its all-time demand Tuesday: 15,454 megawatts. The previous record was last Thursday's 15,311 megawatts. On Labor Day, when the temperature hit 109, demand peaked at 13,864, said Leticia Lowe, spokeswoman for HL&P. Business demand is lower on holidays, she noted.

Weekly storage figures from the American Gas Association that will come out today will signal which way prices will move in the near term. The price rise Tuesday suggested that many traders are betting that gas prices will rise because less gas has been added to storage than was expected.

Typically, the industry likes to have about 3.1 trillion cubic feet in storage by Nov. 1. This year, the nation will be lucky if it reaches 2.6 trillion cubic feet, said Charlie Sanchez, energy markets manager for Gelber & Associates in Houston.

http://www.enn.com/news/wire-stories/2000/09/09062000/krt_natgas_31171.asp

-- Martin Thompson (mthom1927@aol.com), September 07, 2000