Three factors contributed to price increases this week: high petroleum product prices, the continued shut-in natural gas production in the Gulf of Mexico, and the frigid temperatures. For the week (Wednesday to Wednesday), the spot price at the Henry Hub increased 85 cents, or about 6 percent, to $14.80 per million British thermal units (mmBtu). This Wednesday's price of $14.80 was $7.68, or 93 percent, above last year's level of $7.12.
Shut-in natural gas production dropped to 2.3 billion cubic feet per day as of Monday, December 12, from its level on the previous Wednesday of 3 billion cubic feet per day.
The amount of natural gas in storage in the East Region decreased 6.3 percent to 1,744 billion cubic feet for the week ending December 9, which was 43 billion cubic feet above the 5-year average. Nebraska is a part of the East Region (see map) which is a major natural gas consumer, particularly in the residential and commercial sectors. The industrial sector, which includes agriculture, is also a major consumer in this state. Most of the gas is supplied from the Producing Region with a fair amount imported from Canada. The Henry Hub in southern Louisiana is a major market center with interconnections for many of the pipelines that transport U.S.-produced gas to the East Region. Furthermore, the Henry Hub is the preferred reference point for prices for most of the domestic gas destined for the East. Therefore, market conditions and developments in the East Region and price movements and trends at the Henry Hub are usually highly correlated.
Notes: An archive is
available. Divide the price by ten (10) to obtain the price per hundred cubic feet
(ccf) or the approximate price per
Natural Gas Spot Prices at the Henry Hub 2004 and 2005