As noted in my
previous diary (please read if you haven't already) on oil and gas, there is no supply shortage of either crude oil or natural gas, which makes one suspect manipulation of the futures markets. As the previous diary articulated, the excuses for high prices do not make sense.
In today's (5-19-06) Wall Street Journal,
"Volumes in storage [of natural gas] as of May 12 totaled 2.08 trillion cubic feet, the highest ever for this time of year and 53% above the five-year average."
Total gas in underground storage rose by 91 billion cubic feet, according to the federal Energy Information Administration. This is eight billion cubic feet more than estimates. Volumes in storage as of May 12 totaled 2.08 trillion cubic feet, the highest ever for this time of year and 53% above the five-year average.
"That's just simply showing no indication of a reduction in the surplus," said Kyle Cooper, director of research at energy consulting firm IAF Advisors in Houston. "Literally, at this pace, we're going to run out of storage space. We're just going to lave to lower prices to get new demand."
Prices of natural gas have fallen sharply off their highs in late 2005 but they are still about 50% higher than a the ~$4 price before the sudden rise. It is interesting to note that the WSJ article blames "record summer heat and hurricanes in the Gulf of Mexico that disrupted output" for the record prices ($14/MBTU) in the second half of 2005. It is interesting to note that during that period of record high prices, supply was also near record highs undercutting the argument that supply and demand forces were at play.