Gas Prices May Rise Next Summer

Gas Prices May Rise Next Summer The California Energy Commission predicts, not surprisingly, that natural gas prices will go up this winter. However, in a July 13 workshop, commission staff noted that next summer's price will likely be higher than now. Record storage so far this year is driving natural gas prices lower, said Jairam Gopal, CEC natural gas market assessments supervisor. Gas has dipped below $5/MMBtu in recent days at the California border, he said. However, he predicted that the price of gas will rise to between $8.50/MMBtu and $9.50/MMBtu this winter. It will settle down after the heating season, but at a level higher than current prices - around $7/MMBtu. Prices are expected to be highest in Pacific Gas & Electric territory. Gas prices will not drop further for at least two reasons, according to commission staff. First, while the gas market has become partially decoupled from oil, the two are still linked, said Gopal. Second, the cost of coal-fired power generation acts as a floor that will keep gas prices from dropping below $5/MMBtu, said Richard Myers, California Public Utilities Commission Energy Division program manager. The good news is that California gas prices are likely to continue to lag behind prices at the Henry Hub and in the Northeast, where they are tied more directly to the price of fuel oil. In a related announcement the same day, the Western States Petroleum Association said it was concerned that pending legislation would add costs to "California's delicately balanced gasoline and diesel fuel markets." It added that state policies "are also constraining our industry's ability to meet rapidly increasing demand."

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Gas Prices May Rise Next Summer

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