Raymond James & Associates Equity Research group warnedclients this week a return to normal temperatures this winter couldbring a greater gas market surprise than expected. Winterconsumption spikes over the past two winters have trended downward,but that was because winter 1996/97 was nearly 5% warmer thannormal and last winter was nearly 9% warmer than normal, the firmnoted. Normal weather likely will bring a significant increase inconsumption and with it a significant increase in gas prices thiswinter compared to last.

“The bottom line is that the past two exceptionally warm wintersmay have lured investors and gas consumers into a false sense ofsecurity regarding the possibility of spot gas shortages thiswinter,” the investment group said. “A return to even normal winterweather could lead to surprisingly large winter gas demand spikes.As recently as three years ago, such a demand surge caused naturalgas prices to spike upward into the double digit range.”

Raymond James & Associates’ estimates show that a return tonormal weather this winter would lead to an 8% year-to-yearincrease in gas consumption. “If our gas distribution system is notprepared for this demand swing, look out for significantly high gasprices at least for short periods this winter.”

Wefa Inc.’s gas consulting division also came out with a reportthis week cautioning clients about the likelihood the La Ninaweather pattern this winter will cause temperatures to varysignificantly from normal, particularly in the Midwest andNortheast regions, and gas prices to spike. “Consequently, webelieve the Nymex strip prices for January through March are on thelow side,” Wefa said, noting the most likely time to see colderthan normal weather this winter is between January and March.

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