A searing heat wave throughout parts of the U.S. has caused the nation’s stockpile of natural gas to slip recently, driving the commodity’s price this week near a six-month high.
But industry experts said it’s unlikely Colorado consumers will see that translate into higher heating bills this winter compared with last winter – unless a major hurricane damages natural-gas platforms and pipelines on the Gulf Coast, a key area for oil and natural-gas production.
“We are sitting on a healthy storage supply,” said Jim Simpson, managing director at Bentek Energy in Golden. “I don’t know if we’ll have any higher prices this winter than last winter.”
Heavy demand for gas-fired electricity to power air conditioners resulted in a drawdown of 7 billion cubic feet of gas for the week ending July 21, the U.S. Energy Information Administration reported last week. The administration’s next report is due Thursday.
Natural-gas prices have jumped roughly 24 percent during the last month.
Simpson said such a drawdown is unusual for the summer, when natural gas is stockpiled in anticipation of heavy demand during the winter.
But the recent hot weather in the Midwest and East depleted that buildup – if only briefly.
The U.S. demand for electricity reached a record 96,314 gigawatt- hours two weeks ago, according to the Edison Electric Institute, a Washington, D.C.-based trade group.
The prior record, 95,259 gigawatt- hours, was set in July 2005.
One gigawatt of electricity serves about 1 million households.
The record demand caused natural-gas futures to close Monday at $8.211 per 1,000 cubic feet, their highest price since February.
Prices ended down 63.7 cents Tuesday at $7.574 per 1,000 cubic feet.
The recent run-up in natural gas comes after steep declines this year. A relatively mild winter allowed the buildup of natural-gas supplies, causing the commodity’s price to slump after reaching record levels last winter.
Simpson said the recent price spike was driven more by “psychological” concerns related to the drawdown than a supply- and-demand problem.
He pointed to the fact that natural gas in storage totals 2.75 trillion cubic feet, about 22 percent above the five-year average for this time of year. That’s 16 percent above storage levels from a year ago, federal data showed.
But gas prices could march higher if hurricanes, hot weather in the Midwest and East or an early cold snap further drives demand, said John Harpole of Mercator Energy, a natural-gas broker in Littleton.
“It’s always about weather,” said Harpole. “It (heating bills) shouldn’t be worse than last year, but there’s a lot that could happen during the next 90 days.”
Minneapolis-based Xcel Energy, which serves 1.2 million natural-gas customers in Colorado, said it’s too early to project gas bills for the winter.
Staff writer Will Shanley can be reached at 303-820-1260 or wshanley@denverpost.com.
