Natural gas prices decline
Tuesday, August 5th 2003, 12:00 am
By: News On 6
OKLAHOMA CITY (AP) _ Natural gas prices have decreased in the past two months, but industry experts disagree about what heating bills will look like this winter.
``There's a feeling that we're going to have adequate gas going in to next winter,'' said Tony Say, president of Oklahoma City-based gas marketing company Clearwater Enterprises Inc.
The Western Oklahoma Index Price for natural gas dropped 61 cents to $4.53 per thousand cubic feet in August, down from $5.14 in July and $5.45 in June.
On the New York Mercantile Exchange, natural gas closed down 24.4 cents to $4.63 Monday, down $2.02 from $6.65 less than two months ago.
If the country faces typical winter weather, the price of natural gas should average between $5 and $6, Say said. That is still higher than historic levels, but well below the market fears.
But others are not as optimistic.
The country's natural-gas reserves finished last week with about 2 trillion cubic feet, about 60 percent of capacity.
Analysts hope storage is filled at least to the benchmark level of 3 trillion before the winter withdrawal season starts Nov. 1.
``It's going to be hard to get 3 (trillion cubic feet) by the beginning of the heating seasons,'' said Bruce Bell, chairman of the Mid-Continent Oil and Gas Association's Oklahoma division. ``And if we're not there, I think we are going to see prices right back in the $6 or $7 range if we have a normal winter.''
If temperatures are cooler than normal, he said, the country could see localized shortages and price spikes as high as $10 per thousand cubic feet.
Experts had predicted to start this winter with as little as 2.7 trillion cubic feet in storage, but mild temperatures and decreased usage this summer have allowed producers to refill storage at record rates.
Natural-gas prices have fallen accordingly.
But experts disagree whether the country will be able to start the winter with adequate supplies.
With storage levels at 2 trillion cubic feet this week, producers need to add an average of 70 billion cubic feet per week until the refill season ends Oct. 31.
While Say called that a realistic rate, Bell doubted producers could keep up that pace through hot August temperatures.
Oklahoma Corporation Commissioner Bob Anthony predicted last month that Oklahoman's natural-gas costs this winter will be more than 20 percent higher than they were in 2001.
Last winter's average homeowner used 14 decatherms of gas per month and paid $103.67. A decatherm is a heating value roughly the same as 1,000 cubic feet of gas.
This winter, the same homeowner using the same amount of gas will pay $133.66 because of higher gas costs, the commissioner said.
Tulsa-based ONEOK, the parent company of Oklahoma Natural Gas Co., also has warned of higher heating costs this winter and said it will donate up to $100,000 in the next three months to Share the Warmth, a program administered by the Salvation Army that helps people in short-term need pay their heating bills.