Last week gas buyers were pooh-poohing the “hurricane hype” theyhad been hearing earlier about Tropical Storm Charley. Well, sorry,Charley, you may have been a small fish when it came to impactinggas production, but Earl is the real thing.

Cash numbers were skyrocketing Tuesday, with some pointsrecording gains of 30 cents. Only a few failed to hit double-digitincreases, and not by much. While Gulf Coast producers werescrambling to evacuate offshore platforms and shut in non-automatedproduction (see story in this issue) as Tropical Storm Earlapproached the Louisiana shoreline, the West was baking underintense heat that had electric utilities straining.

The Gulf Coast situation was drastic enough that a largeaggregator that usually has daily quotes at many Louisiana pointsreported, “No trades due to production problems.” A tradingofficial estimated the company had lost at least 250 MMcf/d ofequity and third-party gas, and the figure was rising as moresuppliers called in to report production cuts. You don’t get muchopportunity for day trading when your more immediate concern isdamage control, he said.

A Texas producer said she almost didn’t answer the phone whenDaily GPI called because “I was afraid it was somebody else callingto cut me” on third-party supplies.

An electronic trading service sent this message to Gulf Coasttraders: “Wellhead/platform shut-ins due to T.S. Earl are not validforce majeure events with QuickTrade.”

Despite Tuesday’s huge price increases, some sources look forthe spikes to be short-lived. They don’t think Earl will strengthenenough or last long enough to cause more than brief shut-ins.Weather specialists have said storms that originate in the Gulfoften don’t have as much development room or time as ones from theAtlantic Ocean. However, a Gulf marketer expects cash to trade20-30 cents above indexes through the weekend.

“The market has acted in a very mature, civilized manner” inspite of the Gulf’s massive force majeure situation, aHouston-based source said. There was little panicking and even lessfinger-pointing, he went on, and what people may be realizing isthis is a blessing in disguise. “Because this happened on the 1stof the month, you have more than 20 days to make your marketswhole.” If you assume that most of the gas that got cut was bidweekgas priced around index levels in the $1.50s and low $1.60s and youlook at the general direction of this market, the source argued,”you quickly realized you could be picking up payback volumes at amuch lower price.”

Although Western traders naturally paid attention to the Gulfsupply situation, they agreed it was the regional heat, especiallyin California, that was driving up their prices. A marketer saidsome people tried but failed to inject some “storm hype” into theWest’s market equation.

As an indicator of how hot California weather has been since theweekend, San Diego Gas & Electric reported setting a powersendout record Monday, and the California Independent SystemOperator for the state’s electric grid declared a Stage OneEmergency Tuesday, asking consumers to conserve energy. Cal-ISO hada more-severe Stage Two Emergency in effect Monday.

Midcontinent prices are getting boosts both from lessened supplycompetition from the Gulf Coast and from the West’s powergeneration demand, a marketer said. He expects the Western supportto be more durable than that from the Gulf.

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