AGA warns of higher natural gas prices

The American Gas Association reiterated Wednesday that, although natural gas prices are likely to be higher this winter, supplies will be adequate. AGA Pres. David Parker said, 'We're trying to alert consumers that if we have normally cold weather, their natural gas prices could be higher this winter.'


Washington, DC�The American Gas Association reiterated Wednesday that, although natural gas prices are likely to be higher this winter, supplies will be adequate.

AGA Pres. David Parker said, "We're trying to alert consumers that if we have normally cold weather, their natural gas prices could be higher this winter."

AGA said industry would have time to replenish underground storage, which is 20% lower than it was a year ago.

It said storage is 1.733 tcf, vs. 2.161 tcf a year ago. AGA said the total should climb to 2.9 tcf by Nov. 1, slightly below the usual 3 tcf.

The refill of storage may be hampered by high distillate prices, warns AGA. Rather than using distillates, more plants and utilities may burn gas this summer because it is cheaper per btu.

AGA officials said higher oil and gas prices will help the supply response. Gas prices are up 84% from a year ago at more than $4/Mcf, and oil prices are more than double year-ago levels.

They said more than 600 drilling rigs, on average, have been working on gas prospects during the first half of the year, the highest level since 1985.

Also, because oil prices are more than double the levels of a year ago and new gas supplies are often found with oil, that should help gas supplies too.

AGA said higher prices should help boost US gas production to 18.9 tcf this year, up from 17.2 in 1999 and 18.7 in 1998.

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