As you drive by your local gas station and watch the prices increase this weekend and next week, please keep in mind that gasoline is not the only “gas” whose price has been affected by Katrina. Coming on top of already tight supplies, natural gas is now trading for almost $12.00 per million BTU, six times as high as it was 10 years ago.
This is supposed to be the beginning of the “storage” season when demand from air conditioning begins to fall and heating demand has not yet picked up. It is the time of year when the salt caverns that serve as storage facilities for methane are filled up so that there is adequate capacity to respond to those cold winter days. Because of the lowered demands in the electricity market, prices during this time of year are traditionally a bit lower, thus helping to keep the cost for gas in the winter lower than it would have been.
This cycle is being disrupted. Not only are prices high, but there is limited production and transportation available for the gas that would be stored. It might become a very cold and expensive winter for some people, a prospect that seems almost hard to contemplate right now.
A friend pointed me to an interesting editorial that provides some additional thoughts about our current dependence on natural gas. Check it out.
Nuclear energy best option for reducing foreign dependence – http://www.app.com/apps/pbcs.dll/article?AID=/20050831/OPINION/508310409&SearchID=73219112625775