Two weeks ago we left summer behind and more gas is being burned in the U.S. for heating than for air conditioning. All over America, utilities are warning customers that natural gas bills will be higher this year?much higher. Areas that rely on oil for heating will not be spared either. There is plenty of fuel in storage, but the cost of getting it there has been high. And as if Katrina and Rita weren?t enough, here comes Wilma. Nearly all of the gas in storage was purchased before the hurricanes hit and drove prices to record levels, creating the third price spike of this brief century. The first occurred in January 2001, when the monthly average spot price reached $8.59/MMBtu (in constant 2000 dollars). Storage levels had reached alarmingly low levels, and the market was worried about shortages. The second spike occurred in March 2003, when the monthly average price reached $6.86/MMBtu on similar concerns. This year is different. Storage levels are expected to peak in a week or two around at 3,100 billion cubic feet. That should see us through the winter. Nevertheless, the average price this month is expected to exceed $10/MMBtu, driven by the rising price of crude oil and concerns about the lasting effects of the hurricanes. Nearly half of the gas production from the Gulf of Mexico, a region that supplies more than 15 percent of the nation’s supply, remains off line because of hurricane damage. Cumulatively, about 10 percent of the region’s entire annual production has been forgone. By year-end, lost production from the Gulf may exceed the total imported as LNG all year. This is a big hit to North American gas supplies. We have been living close to the edge for several years, with no spare production capacity. The industry has been drilling at a record pace merely to keep production from falling. Small wonder that prices are at record levels. By November, heating loads will increase and gas will be taken out of storage to meet them. I?m not worried about running out of gas. But I do expect gas prices to reflect the impact of this year?s hurricanes well into next year. If this coming winter is extra cold and it takes longer than expected to get production back up in the Gulf, natural gas prices could reach stratospheric levels next year. A winter of discontent, indeed.