Tight

Local distribution companies contending with tight gas supplies, volatile pricing and sometimes the threat of hurricane-related shut-ins do well to remember the virtues of diversity — specifically, diversity of supply, transportation and pricing strategies.

Coming off of a year that saw record financial results for his company, the CEO of W&T Offshore would appear to be undaunted by a tight market for drilling rigs and costs that have escalated sharply on the strength of high commodity prices.

Citing a tight gas supply that has been exacerbated by hurricane-induced Gulf of Mexico shut-ins, PECO said sharply higher wholesale market prices have led it to impose an “unavoidable” 26% rate increase for its suburban natural gas customers. The utility said the rate hike will take effect Dec. 1.

Weather fundamentals are weakening a bit, but the prospect of much higher prices this winter coupled with a tight supply situation kept quotes on the rise Wednesday at nearly all points. A few flat to lower points kept the gains from extending across the board.

“Keep the lights on and keep the people warm. Keep listening to the customer…I think when we have failed to do that on both the power and gas side, industry has suffered and the country has suffered,” departing Chairman Pat Wood said when asked for his advice to commissioners and staff of the Federal Energy Regulatory Commission and the energy industry.

With the November elections about six weeks away, several Senate seats will be up for grabs in what could be tight races in the key oil and natural gas states of Oklahoma, Louisiana and Alaska.

Nearly mirroring survey results of other energy analyst groups in recent days, Raymond James said last week that U.S. natural gas production fell 4.2% in the first quarter year-over-year, and “as before, we see no significant near-term catalysts to alter the declining supply picture, and therefore, price rationing remains the only viable option to bring the market into equilibrium.”

Nearly mirroring survey results of other energy analyst groups in recent days, Raymond James said Monday that U.S. natural gas production fell 4.2% in the first quarter year-over-year, and “as before, we see no significant near-term catalysts to alter the declining supply picture, and therefore, price rationing remains the only viable option to bring the market into equilibrium.”

There would be progressively greater impacts on natural gas consumption, prices and domestic supply if any or all of three restricted gas supply scenarios studied by the Energy Information Administration (EIA) occurred, the agency said in a special report released last week.