Natural Gas

It appears fairly certain now with today’s natural gas storage report numbers that we have seen our low prices for the Spring and Summer for natural gas and electricity. The air conditioner weather and potential hurricanes will now become the primary factor in pricing between now and September/October when the amount of natural gas in storage will be a big story again.

The analysts were looking for a build up in inventory of natural gas in storage of 111 bcf, but today’s report shows only a build of 107 bcf. On the surface this does not appear to be a bad report, but the market did not like it. The current natural gas contract has jumped over 25 cents today.

The increase of 107 bcf in storage was 10 bcf over last year’s corresponding number and 19 bcf over the corresponding 5-year average number, but it was 4 bcf under what the market was looking for today. Last week we EXCEEDED the analyst’s estimate by 3 bcf, and gas still went up 6 cents that day. Therefore, the storage numbers are only confirming to the traders Deutsche Bank was correct and they should buy, buy, buy. Up go the prices.

President Obama’s EPA has taken his agenda regarding carbon emissions and are going to implement what Congress voted “NO” regarding the “Cap & Trade” carbon tax. Their new regulations will make it impractical to run coal-fired power plants. That means these plants will have to shift over to natural gas or some other fuel, gas being the cleanest. The same environmentalists won’t allow us to build nuclear power plants, the cleanest, and other new power generation plants are too expensive now to build unless the cost of electricity goes up substantially.

You may remember Obama’s speech in San Francisco when he said everyone would pay “MUCH HIGHER ELECTRICITY BILLS” after he got his “Cap & Trade” policy implement. It has arrived.

My point – companies when they renew their electricity contracts should look at signing up for the longest term they can get, generally 4 or 5 years, to lock in today’s electricity rates for as long as they can at this time because we will more than likely see much higher rates in the future. And they should do everything possible to reduce their usage and their demand factor as well.