Natural Gas

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In the below OPIS Y2K Alert, it mentions ... natural gas curtailments. Does anyone know any more about this? What caused the curtailments? How long will they be? I've seen this mentioned several places, but have not seen any reason why.

OPIS excerpt from below: "There is very strong demand coming from utilities who need the extra oil because of natural gas curtailments, or because of anticipated electricity demand surges that could take place when brutal weather reaches the northeast this evening."

(OPIS Y2K Alerts) 2000-01-20 18:00:56 EST ***FUEL PRICE SPIKE ACCELERATES; PRICES NOW 200% ABOVE LAST JANUARY 1/20 - (5:30 P.M.) - - Fuel prices are following the script of internet stocks today, soaring by increments not seen since the Persian Gulf War or the supply crunch of December 1989. The increases are dizzying in their scope, with many products now more than 200% above where they stood a year ago. The end of the formal trading day Thursday hasn't stalled the spike. NYMEX heating oil futures closed up 6.43cts gal at 86.46cts gal during the pit session, but they have added nearly 3cts gal more in the "after hours" trading session and stand at 89.45cts gal as of 5:30 P.M. EST. For futures, these numbers represent spectacular gains with values up more than 25cts gal from where they stood on January 10. But prices in the cash market have left futures numbers in the dust, posting gains of more than 50cts gal in the same ten days time. Heating oil in barges in New York Harbor, for example, is currently assessed at some 17-20cts gal over the February NYMEX price. Based on the after hours futures quote, this pushes fuel costs to close to $1.10 gal. Diesel fuel is along for the ride, with many suppliers dyeing diesel inventory so they can move the bbls into the heating oil pool. There is very strong demand coming from utilities who need the extra oil because of natural gas curtailments, or because of anticipated electricity demand surges that could take place when brutal weather reaches the northeast this evening. Diesel prices are also approaching $1.10 gal in New York Harbor and suppliers throughout the region are raising wholesale rack costs by 5-20cts gal at terminals all along the East Coast. The trucking firm which paid well under $1.00 gal at retail last year, is now facing costs that are as much as 50-75cts gal above January 1999 rates. Most of the fuel demand surge is in the northeast where a cold front is scheduled to put the region in a deep freeze through the weekend. Latest extended weather forecasts put colder than normal temperatures in the region through February 1 and that has some suppliers worried. "This is the 'dark side' of 'just in time' inventory" noted one northeastern supplier. "There really isn't a lot that refiners and shippers can do to get product where it's needed in the next ten days." The supplier predicts that heating oil retailers may even see allocations within the next few days. The strength has at least partially lifted prices through the rest of the country. Gulf Coast diesel values have moved into the low 80's, and marketers across a wide swath of the country saw increases of 5cts gal or more this afternoon. Friday's market is predicted to be a wild one in the cash market, since it will inevitably find East Coast suppliers scrambling to find much needed inventory to handle weekend demand. The rise in crude oil has been enough to inspire some calls for SPR sales, which could ultimately pressure March WTI futures in the next few days. But the Strategic Petroleum Reserve doesn't hold bbls of heating oil, diesel, jet fuel, or kerosene, so a call to action by the government may not pressure those physical prices lower. Here's a look at how some key products have performed over the last ten days, and how wholesale spot prices compare to last year. - Tom Kloza, tkloza@opisnet.com THE 21ST CENTURY PRICE SPIKE Product Jan. 10 Current price estimate Last year ------ ------- ------------------- NY Spot No. 2 66.00 $1.07 gal 32.0cts gal NY Spot diesel 69.50 $1.08 gal 32.5cts gal NY Jet Fuel 82.75 $1.18 gal 35.0cts gal NY Kerosene 85.00 $1.29 gal 37.0cts gal NY Unl Gas 67.00 77cts gal 34.0cts gal ---

-- Lee Barber (LeeeeeeB@webtv.net), January 20, 2000

Answers

"There is very strong demand coming from utilities who need the extra oil because of natural gas curtailments, or because of anticipated electricity demand surges that could take place when brutal weather reaches the northeast this evening. "

-- Hokie (Hokie_@hotmail.com), January 20, 2000.

hokie, that didn't answer the question

-- boop (leafyspurge@hotmail.com), January 21, 2000.

Strong residential and commercial use of natural gas is diverting natural gas away from the utilities. The gas isn't really being curtailed, it's being diverted.

-- Dog Gone (dawgawn@yahoo.com), January 21, 2000.

Thanks DogGone .... that sounds reasonable. I hadn't heard of any pipeline problems up there to account for an serious problems. You would have thought the utilities would have factored that in their winter planning, with Y2K and all facing them though. Where are all those 30-60 day fuel stockpile inventories they supposedly had?

-- Lee Barber (LeeeeeeB@webtv.net), January 21, 2000.

That may have been overstated for the New England utilities. A lot of the midwest utilities stockpiled that much coal, but that may never have been feasible for the plants that can switch back and forth from natural gas and diesel. Just a guess. I don't live in that part of the country and know nothing about the physical facilities up there.

-- Dog Gone (dawgawn@yahoo.com), January 21, 2000.


"In the below OPIS Y2K Alert, it mentions ... natural gas curtailments. Does anyone know any more about this? What caused the curtailments? How long will they be? I've seen this mentioned several places, but have not seen any reason why. "

With six males in residence, we have a lot of natural gas here. If anyone has any definitive information on curtailments, I'd sure like to hear it. Preferably, the longer the curtailment, the better. As to asking the reason why...so far all that seems to be required is water, air, and absolutely any kind of food. The only 'reason why' seems to be the male factor...

Got Beano?

-- Mumsie (shezdremn@aol.com), January 21, 2000.


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