Americans to pay 29 pct more for natural gas

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Americans to pay 29 pct more for natural gas November 8, 2000

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WASHINGTON (Reuters) via NewsEdge Corporation -

American consumers will pay about 29 percent more for natural gas to heat their homes this winter than last year, the U.S. Energy Information Administration said on Wednesday.

The price increase reflects tight supplies and soaring demand that mirrors similar conditions in the heating oil market.

U.S. officials have repeatedly warned consumers to brace for higher prices this winter -- especially if the weather is unusually frigid.

``If our base case projections hold, residential prices for natural gas would be about 29 percent higher than last year during that period,'' the EIA said in its monthly short-term outlook report.

Prices for natural gas at the wellhead and in the spot market are also higher than last year, the EIA said.

With U.S. natural gas inventory levels at least eight percent lower than one year ago, November will be a key month in determining gas supplies and prices for the rest of the winter, the EIA said. ``Given the presently low state of natural gas inventories, a cold November would curtail net injections,'' EIA said.

``On the other hand, we have seen from what happened in October that spot gas prices would be expected to fall sharply if warm weather continues,'' the EIA added.

If the United States has normal weather for the remainder of the winter heating season, natural gas wellhead prices this winter would ``probably'' stay above $4.00 per thousand cubic feet (mcf).

The EIA said it expected wellhead prices to increase by about 90 percent this winter over the year-ago period.

Since June, spot wellhead prices have averaged more than $4 per mcf, the EIA said. Although prices briefly soared above $5 per mcf in early October, they fell sharply throughout most of October, the EIA said.

``Spot prices have never been this high for such a sustained period of time,'' the EIA said.

http://www.individual.com/story.shtml?story=d1108132.301

^ REUTERS@

-- Martin Thompson (mthom1927@aol.com), November 08, 2000


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