Pipeline, weather issues cause rise in gas prices

Natural gas for January in the U.S. Northeast is the most expensive in more than a decade on concern that pipelines may not be able to ship enough fuel, risking a repeat of last winter’s record prices, Bloomberg News reported last week.
Supplies in the so-called consuming East region, which covers the Northeast to the Midwest, are at the lowest seasonal level since 2000, government data show. Additional pipelines into New England from the Marcellus shale fields in Pennsylvania won’t begin service until at least late 2016.
Buying gas at current levels now may turn out to be a bargain. While the fuel in New York for January is selling at $13.60 per million British thermal units, more than nine times current prices, gas surged to a record $135 last January as frigid weather boosted demand beyond what pipelines could deliver.
Gas for delivery to the Algonquin City Gates in New England next January was valued at $20.943 per million British thermal units on Oct. 3, a $16.86 premium to Henry Hub, according to Bloomberg Fair Value prices. A year earlier it was trading at an $8.498 premium.
Commodity Weather Group LLC in Bethesda, Md., said computer models are showing that the heating season in the lower 48 states will be colder than normal, though warmer than last year, according to a Sept. 24 note to clients.
ISO New England Inc., which saw the highest average gas prices in the country last year, expanded a reliability program that provides power generators with payments to cover costs for stockpiling oil and liquefied natural gas and boosts agreements to curtail demand. Gas wasn’t included in the plan’s debut last winter. •

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