The Minerals Management Service reports that 400 billion cubic feet of natural gas production have been "shut in" as a result of damage from the recent hurricanes. Market prices spiked to $14\/MMBtu as fears of shortages were rampant. But these fears were unfounded - the flow of natural gas into storage has been virtually unaffected. Lots of gas flows into storage during the months of September and October in anticipation of higher winter demand. The heating season has not gotten started, and electricity demand for air conditioning is low. Based on the weather this year and the pre-hurricane supply situation, an estimated 630 bcf of natural gas would have been added to storage in the last two months if the hurricanes had not interfered. The US Energy Information Agency reports that the actual amount added to storage was 535 bcf, a deficit of less than 100 bcf?not the 400 bcf of lost production cited by MMS. What happened? Where did 300 billion cubic feet of extra gas come from? Us analysts are scratching our heads over this question. One possibility is that demand for natural gas has been 300 bcf lower in the last two months due to the storms. Unfortunately, USEIA reports consumption two months after the fact, so we won't have October data until the end of December. Nevertheless, a dramatic decline in consumption during the last two months, approximately 10 percent of national consumption, appears to be the most likely explanation for the extra 300 bcf of gas. Refineries are heavy users of natural gas. Since several have been closed by the storms, the gas they would have used likely went into storage. Damaged homes and businesses also used less. Power plants were shut down, thereby saving additional gas. And the spike in prices assured that everyone nationwide with the opportunity to burn other fuels did so. We don't have enough information yet to be certain, but a 300 bcf demand reduction is credible. When you stop to think about it, however, it is pretty amazing that the US could lose 11 percemt of the annual production from one of its most prolific supply regions and hardly see a dent in storage levels. Evidently, much of the gas we would have gotten from the Gulf of Mexico would have been consumed by homes, businesses and industries in the area that were damaged by the storms. The long and the short of it is that the hurricanes hardly affected natural gas supplies in the rest of the US. So don't believe the stories blaming the current high price of natural gas on Katrina and Rita. Hurricanes? What hurricanes?