<i>Editors' Note: We have changed the format of Dr. Ferguson?s column on natural gas by eliminating the tabular report on storage activity and expanding the analysis. We welcome comments on the new format. Opinions expressed in this column are those of the author, and this publication takes no responsibility for their accuracy.<\/i> As I expected, Hurricane Ivan reduced gas supplies from the Gulf of Mexico by about 25 Bcf in the week ending September 17. The amount of gas going into storage was reduced by a similar amount. Production in the Gulf of Mexico has not fully recovered, and I expect another shortfall of 20 Bcf for the week ending today. Ivan caused spot prices to jump by $1\/MMBtu as traders compete for limited supplies. Prices for gas to be delivered in October have responded somewhat less dramatically, closing yesterday at $5.49\/MMBtu, 10 cents lower than the spot price. Gas in storage is about 10 percent above historical averages for the date, due in large part to an abnormally cool summer. According to my model, gas used this summer by power plants to supply air conditioning loads was the lowest in six years, 13 percent below the average of the last five years. This freed up an additional 150 Bcf of gas for storage. After taking into account short-term fluctuations due to hurricanes and changes in heating and cooling loads, supply and consumption have remained in balance during the last six months. Ample supplies have arrived in response to an average price of $5.88\/MMBtu, triple the price of a decade ago. Current high levels of gas in storage may drive prices lower in the near term. However, if prices were to stay low, supplies would soon shrink and drive prices back up. I am forced to conclude that in the longer term, prices in the $5-$6 range or higher are required to satisfy current levels of consumption. And at these prices, significant growth in consumption seems unlikely.