Just in time for April Fools? Day, natural gas prices soared again. The average NYMEX price for gas over the next 12 months closed Thursday at $8.10/MMBtu. The sad thing is that I?m not kidding?you can check for yourself. The May contract was up another 17 cents to $7.64/ MMBtu, while gas for next January closed at $8.77/ MMBtu. Whew! It?s hard to see where this irrational exuberance will end?$10 gas is not out of the question. The reasons for these amazing prices are hard to discern. Yesterday?s gas storage report showed a draw of 51 billion cubic feet, smaller than I had forecast but larger than the ?consensus? projection of 30 to 50 Bcf. Hardly earthshaking news. While it is true that gas production in the U.S. and Canada is likely to be down again this year, storage levels remain above average. Also this week, Goldman Sachs shook up the oil markets with a new report claiming it might take prices as high as $105 per barrel to reduce demand and rebuild a production capacity cushion. Prices rose despite a bearish crude oil storage report on Wednesday. Gasoline stocks are low, kindling fears of tight supplies for the heavy driving season that begins on Memorial Day. The strength of oil and gasoline no doubt helped support natural gas. Gas fueled 51 percent of the electricity generated in California in 2004, according to the U.S. Energy Information Administration. Despite the cost, California is preparing to run every old gas-fired power plant in the state this summer. PG&E recently even signed a contract with the antique plant in Morro Bay that the utility unloaded on Duke a few years ago. Keeping the lights on (and thus the politicians in office) won?t be cheap. Utilities have little or no incentive not to burn gas since fuel costs are merely passed through to consumers. Meanwhile, 2,000 MW of potential geothermal power in Imperial and 4,000 MW of potential wind power in Tehachapi remain inaccessible for lack of transmission. Is anybody paying attention? Or are we April Fools?