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Cascade Natural Gas: Prices
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Natural gas prices have been increasing over the last few years all around the U.S., not just in California. The recent run-up in national natural gas prices is mainly occurring in the North American supply basins. The price increases are not specific to California as was the case during the 2000-2001 price spikes. In fact, California is actually enjoying lower natural gas prices than the U.S. average.
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The Northwest Gas Association expects natural gas demand in the region to increase across all market sectors by 9.3 percent through 2010. And with “no extensive new supply on the immediate horizon, pressures on prices will continue for the foreseeable future,” the association reports. Seven of 10 new single-family homes nationwide were heated with natural gas or propane in 2004, according to AGA.
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Killer Coalbed Methane Gas Powers Chinese Taxis - The Chinese are now excited about natural gas. Coalbed methane gas (CBM) now supplies more than 80,000 households and 1,000 taxis in China's Fuxin City. One cubic meter of compressed CBM is the equivalent of 1.13 liters of gasoline, but retails for less than one-half the price of gasoline. click here
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Futures contracts are used to fix the price of expected future natural gas sales at major trading locations such as the Henry Hub, Louisiana. Swap agreements ... fix the price differential between the price at Henry Hub and various other market locations. Options are used to establish a floor and/or ceiling price for future gas production. The risk associated with financing debt with future gas production is determining what the future price of gas will be when the gas is produced. Figure C9-1 shows a schematic layout of relationship of risks involved and expected returns in various phases of the oil and gas industry.
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SHORT-COVERING FOLLOW-THROUGH FIZZLES; FUTURES CLOSE 12.7 CENTS LOWER Traders were prepared for anything Tuesday as the debate swirled on whether there would be enough momentum left from Monday's natural gas futures price jump to fuel another round of short-covering. The answer, at least for now, is "no," as the July contract dropped 12.7 cents to settle at $8.064.
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The primary driver of the recent volatility and increases in natural gas prices to consumers is the gas commodity market. The state agencies (the CPUC and the California Energy Commission) believe that underlying, "fundamental" market conditions explain why U.S. natural gas commodity prices have been increasing on a long-term basis since early 2002, such as:
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