Natural gas storage levels are 50 percent above average for the date. This is largely due to industrial and other temperature-independent consumption falling dramatically since last summer?s hurricanes. Many pundits credit this gas bonanza to a mild winter and lower gas demand for heating this year. But this decrease fails to account for the current storage surplus. Based on data now available for the five months following the hurricanes-September through Januarygas supplies decreased by about 550 billion cubic feet as a result of hurricane damage in the Gulf of Mexico. At the same time, storage levels increased by about 570 bcf above the five-year average, much more than the savings from mild weather. \t Somehow from September to January following the hurricanes, we unexpectedly managed to both overcome the loss of 550 bcf of gas production and develop a surplus of about the same amount. That is a swing of more than a trillion cubic feet of gas (1,120 bcf). The mild weather accounted for only a fraction of the surprising surplus. The majority, approximately 700 bcf, apparently was due to a decrease in industrial demand that is independent of weather and temperature. Consumption in this large temperature-independent sector was an amazing 12 percent lower than average for the same five months in the previous half-decade. Some of this was expected, because refineries in the Gulf region, heavy users of natural gas, were out of commission. Prices during the period spiked to record levels. No doubt there was considerable effort to voluntarily reduce consumption as well. Gas-fired power plants may have been curtailed in favor of coal fuel. Some gas users may have switched to fuel oil. Some may simply have given up and moved operations overseas. It is too soon to know whether this dramatic drop in industrial gas demand will persist. But if the decrease were to continue, US total annual gas consumption would fall about 9 percent, more than 1,600 billion cubic feet per year! As readers of this column may recall, I was puzzled that so much gas continued to flow into storage after the hurricanes. Now we know it is because industrial consumption fell dramatically. Consumption was lowest in September and October. It has recovered somewhat since then, but the five-month total was still surprisingly low. I admit to being flabbergasted by the huge 9 percent drop in U.S. gas consumption. If the current trend were to continue, it would have an enormous impact on gas markets, plans to import liquefied natural gas, and the U.S. energy markets. Historically, more than 2,000 bcf of natural gas is added to storage between the first of April and the first of November, when the heating season begins. Storage levels today are about 1,700 bcf. An additional 2,000 bcf by November would exceed total U.S. storage capacity. Moreover, if industrial consumption remains low, there could even be an additional 500 bcf or so looking for storage space. The gas market appears not to realize the coming crunch in gas storage space. Wholesale prices continue to hover in the $7\/MMbtu range, and the average price for delivery over the next 12 months is nearly $9. The growing surplus of natural gas, if it continues, will surely depress those prices in the coming months, perhaps dramatically.