The American Gas Association (AGA) announced Tuesday that it believes natural gas prices for the 2011-2012 winter season will be similar to prices from last winter, but stressed that a repeat of the gas delivery disruptions seen last February in the Southwest were unlikely this time around due to warmer weather and higher gas supplies.
“There is an abundance of shale gas, and our expectation is that the milder weather will contribute to stability in the commodities market,” Chris McGill, AGA’s managing director for policy analysis, told NGI on Wednesday. “We see stability in the market in terms of prices and bills, including for natural gas, and the prices will be similar to last year.”
McGill said the AGA isn’t expecting temperatures on par with the extreme cold from early February, which caused well freeze-offs, power outages and compressor failures. The cold snap in turn interrupted gas deliveries to thousands of customers in New Mexico, Arizona and Southern California supplied through El Paso Natural Gas and Transwestern Pipeline (see Daily GPI, Feb. 7).
“We’re not expecting to see another outage like that,” McGill said. “Outages in any parts of the country are rare, and we don’t expect the conditions that led up to those disruptions to be repeated. But everything is dependent on what the weather does.”
In a statement, the AGA added that the national economy could also affect prices.
“Ample domestic natural gas supplies are available to meet customer needs, and there should be little change in the overall winter bills, even during what is still a very uneven period of economic recovery for the nation,” the AGA said.
Despite the sluggish economy, Bree Raum, AGA’s director of government relations, urged Congress to fully fund the Low Income Home Energy Assistance Program (LIHEAP). She said the program was funded $2.57 billion during fiscal year (FY) 2012, a significant decrease from the $5.1 billion the program received in FY2010 and FY2009, and the $4.7 billion that LIHEAP got in FY2011.
“If states are forced to operate at the $2.57 billion level, this will mean a roughly 50% cut to their home heating assistance budgets,” the AGA said.
On Wednesday the Energy Information Administration in its Winter Fuels Outlook said it expects households heating with natural gas to spend 3% more than previous winter (see related story).
Last week the Natural Gas Supply Association (NGSA) predicted that natural gas prices would remain flat for the upcoming winter season (see Daily GPI, Oct. 5). The NGSA said a sluggish economy, warmer weather and increased production were all contributing factors.
An August report by the Federal Energy Regulatory Commission and the North American Electric Reliability Corp. concluded that more storage in the Southwest could have alleviated some of the gas delivery disruption problems from last winter (see Daily GPI, Aug. 18).
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