NGI The Weekly Gas Market Report / NGI All News Access

2005 Warmest Year on Record; Mild Winter Pushing Gas Prices Lower

Calendar year 2005 had the highest global surface temperature in more than a century, narrowly edging out 1998 -- the warmest previous year -- as the warmest year on record, according to James Hansen, director of NASA's Goddard Institute for Space Studies.

"Record warmth in 2005 is notable because global temperature has not received any boost from a tropical El Nino this year," Hansen said in a recent report. "The prior record year, 1998, on the contrary, was lifted 0.2 degrees C above the trend line by the strongest El Nino of the past century. Global warming is now 0.6 degrees C in the past three decades and 0.8 degrees C in the past century. It is no longer correct to say that 'most global warming occurred before 1940.' More specifically, there was slow global warming, with large fluctuations, over the century up to 1975 and subsequent rapid warming of almost 0.2 degrees C per decade."

Noting there was a weak El Nino in 2002, Hansen said the "quasi-regularity" of recent El Ninos at intervals of about four years suggests the likelihood of an El Nino in 2006 or at latest 2007. "In such a case the 2005 global temperature record will almost surely be broken."

The largest warming areas have occurred in Alaska, Siberia, the Antarctic Peninsula and in most oceans. As a result, the study concludes the remote location of most warming makes it clear that the warming is not a product of local urban influence.

The warming trend can especially be seen this winter, by looking at heating degree days (HDD). HDD are used to estimate how cold the climate is and how much energy may be needed to keep buildings warm. HDDs are calculated by subtracting the mean daily temperature from a balance temperature, and summing up only positive values over an entire year. The more heating degree days, the colder the winters. Winter officially began Dec. 21.

According to, New York City's heating degree days for Dec. 2005 were 915, up slightly from the city's normal accumulation of 844. However, for Jan. 2006 (through Jan. 24), NYC had racked up 554 HDDs, down from the normal 745.

Likewise, Boston's HDD for Dec. 2005 were 1,002, up slightly from the city's normal accumulation of 932. However, for Jan. 2006 (through Jan. 24), the city had racked up 648 HDDs, down from the normal 816.

The same trend can be seen in Chicago, where 1,264 HDD were recorded for Dec. 2005, up slightly from the city's normal 1,120. For Jan. 2006 (through Jan. 24), 658 HDD were recorded, far fewer than the city's normal 960.

"The January Thaw arrived early and will stay late," said expert senior meteorologist John Kocet. "For the past several weeks, the cold we are accustomed to this time of year has been bottled up well to the north. A shot of cold air has been released from southern Canada every once in awhile, but the bitter stuff that can cause bodily harm is far, far away."

Kocet noted the reason for the much-above-normal temperatures this winter is a high-powered Pacific jet stream. "As long as it retains its tenacity there will be a serious lack of cold weather," he said last Wednesday. "Perhaps the biggest impact from all this is a much lower usage of oil, gas and electricity to heat homes. The high prices of such things always puts a dent in the wallet, but just imagine how much worse it could be if the weather had been extremely cold this winter."

Much worse indeed. Since the warm weather trend hit in mid-to-late December, February natural gas has plummeted from a high of $15.78 on Dec. 13, 2005 to an intraday low of $7.75 on Jan. 26, marking a $8.03 swing. The February contract expired Friday at $8.40.

With residential thermostats lower than normal, the warmer winter has also led to near-record natural gas storage levels for this time of year. As of the week ended Jan. 20, 2006, an astounding 2,494 Bcf of natural gas remained in working gas storage underground, according to the Energy Information Administration (EIA). The five-year average for this time of year is 2,049 Bcf in underground stores.

Over the last 12 years, 2002 was the only year with more gas in storage following the third week of January. The report for the week ended Jan. 18, 2002 revealed a working gas storage level of 2,522 Bcf, but this estimate was derived from a computation process that used both EIA monthly survey data and American Gas Association weekly survey data. Spot month natural gas futures prices closed that very same week in 2002 at $2.236.

©Copyright 2006 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.

ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus