Causes

FERC Chairman James J. Hoecker has signaled that the Commissionis investigating the causes for the rapid escalation in natural gasprices in California and elsewhere in the nation.

The thunderstorm formerly known as Hurricane Gordon moved toofar east too fast then slowed too much too soon to have much impacton the key U.S. oil and gas production areas off the Gulf ofMexico. By Monday afternoon, the evacuated offshore workers hadbeen returned to their rigs and power lost in Florida communitieshad been restored.

Despite a Wednesday afternoon storage report that many tradersconsidered modestly bullish, most prices fell by up to a nickelThursday. California and a few Rockies and South Texas points, withflat to slightly higher showings, defied the overall trend.

There was decided regional divergence in Tuesday’s swing pricemovement. The Gulf Coast and Appalachia/Northeast, being the areasstill affected most by unseasonably warm weather, ranged from flatto down as much as a dime. But from the Midcontinent westward,where it actually seemed a bit winterish behind a cold frontheading east, prices were flat to a few cents higher, with theRockies, Southwest basins, California and intra-Alberta seeingincreases of about a nickel or more.

With the futures screen lending little to no direction to thecash market, weather took over as the dominant influence Tuesday.Existing and expected chilly temperatures caused gains between 4and 10 cents in the Gulf Coast and Midcontinent regions. Northeastpoints made the biggest moves of the day, with many jumping morethan 15 cents.

What are the chances that the U.S. would experience yet anotherwarmer-than-normal winter after just having two in a row?Apparently they’re pretty good right now, according to a new winterweather forecast released last week by the National Oceanic andAtmospheric Administration. One thing is certain: the La Ninatropical Pacific sea temperature event, which is expected toinfluence this winter’s weather, will throw a monkey wrench intoregional weather forecasting models.

Due to confusion over service area territory, 2,300 East OhioGas (EOG) customers wrongfully switched suppliers from the utilityto ACN Energy, the marketer admitted earlier this week. A letterhas been sent to the involved customers. No money changed hands andACN has taken responsibility for the mistake.

Defying the conventional wisdom that lower gas demand over aweekend usually causes softer prices, cash prices put on a show ofstrength Friday with nearly all points rising by a nickel or more.An increase of less than a penny in the Henry Hub futures contractprovided little support for the cash market, so sources concludedit must have been the residual effect from Thursday’s screen run-upof nearly a dime that helped push up cash quotes Friday.

MichCon crews were working yesterday to restore gas service todowntown Detroit businesses and residents after the pressure of awater main break caused a nearby gas line to rupture. The ruptureoccurred at the corner of St. Antoine and Mullet Street, behind theFrank Murphy Hall of Justice at about 11 p.m. Saturday, causingwater to flood MichCon’s gas line.