You STILL in NG heavy here 'Q'? Remember Jim_P talking about 'flush production' a few months back? Is this perhaps why prices are dropping so dramatically?
Natural gas prices fell so sharply Monday that trading of the fuel was temporarily halted on the New York Mercantile Exchange.
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Gas prices on the Mercantile, which trades the fuel for future deliveries, fell $1 per thousand cubic feet Monday morning, which triggered the halt.
After trading resumed, gas prices closed at $5.71 per thousand cubic feet, down $1.03, for gas delivered in March. That's down more than 40 percent from December highs.
Mark Gurley, vice president of trading for Aquila Energy, a Kansas City gas marketer and risk manager, said that gas markets were still skittish but that there was increasing confidence that the worst was over and gas supplies were sufficient for the rest of the winter.
"There is a perception that there's enough storage gas to last the winter," he said.
That could be very good news for gas utility customers. Utilities already are paying less for gas this month than in January because of falling wholesale prices. If the trend continues, consumers can expect relief, if they haven't already received some.
On Jan. 24, Missouri Gas Energy increased by 44 percent the cost-of-gas charge for its customers to $9.82 per thousand cubic feet. The charge is adjusted only two or three times in a normal year, so the current charge could have stayed in effect until June 30.
But the company now hopes, especially if prices stay at current levels, to cut its gas charge in the next few weeks. Regulators say they are willing to waive price adjustment rules so the cost-of-gas charges can be rolled back sooner rather than later.
"We hope to have an adjustment in prices in effect by the beginning of March," said Paul Snider, spokesman for Missouri Gas Energy.
Kansas Gas Service, which had a higher cost-of-gas charge than Missouri Gas Energy for most of January, reduced its rate earlier this month. Unlike in Missouri, Kansas utilities can adjust their gas charges monthly.
Kansas Public Service and Peoples Natural Gas in Kansas, which are owned by UtiliCorp United Inc. cut their gas charge by 29 percent effective Feb. 5, from $10.80 to $7.60 per thousand cubic feet.
Greeley Gas Co. in Kansas said Monday that if prices don't go back up sharply, they expect next month to reduce gas rates from the company's current charge of $10.57 per thousand cubic feet, the Kansas City area's highest.
But even with reductions in gas rates, consumers are unlikely to see rates fall to levels of a year ago, when wholesale gas prices were just above $2 per thousand cubic feet.
Gurley said concerns about refilling gas storage and increased use of gas by electric utilities could set a floor under gas prices at about $5 for the balance of the year.
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