While hardly a nightly newscast goes by without noting the high cost of gasoline, the American Public Gas Association (APGA) is telling Congress it better do something to address high natural gas prices and warns that this December's heating bills will reflect a doubling in the commodity cost from a year ago.
APGA -- the trade group for publicly owned, not-for-profit gas distributors in 36 states -- told congressional leaders in a letter last week that "over the last 10 years if gasoline prices increased at the same rate as natural gas, drivers would now pay more than $6.50 per gallon."
The letter also states that the "influx of new players and huge sums of cash help drive the direction of price and create extreme swings of volatility in the market," and it commends Congress for its "focus on the impact speculative investment has on the price of natural gas and other energy commodities." The letter urges seismic surveys of all potential production areas, including those areas currently off limits to production.
"Since earlier this year, our nation's attention has been focused on the high price of gasoline, especially in advance of the summer driving season," the letter said. "APGA believes it is equally important to focus on the price of natural gas in advance of the winter heating season.
"Last week, the spot price of natural gas passed $12.00. If the price can go that high in June, one can only imagine the potential price that consumers will pay in the winter heating months. Why America has some of the highest natural gas prices when we have abundant natural gas reserves is simply -- outrageous.
"We maintain that a greater level of market transparency is also necessary to restore public confidence in the pricing of natural gas and help ensure the price consumers pay reflects appropriate market fundamentals and is not the result of market manipulation, excessive speculation, or other market abuses.
"While the recently-passed Farm Bill [see NGI, May 26] will help increase market transparency and restore confidence in the markets, it is just a first step to tame a market where hedge funds, speculators, paper trades, financials and swaps overwhelm both the physical supply and legitimate hedgers."
Intelligence Press Inc. All rights reserved. The preceding news report
may not be republished or redistributed, in whole or in part, in any
form, without prior written consent of Intelligence Press, Inc.