Prices that were already high in relation to historical norms catapulted even higher this week due to Hurricane Katrina taking a major portion of production off-line in the Gulf. Hurricane Katrina made landfall at 6 a.m. on Monday and moved through the Gulf of Mexico resulting in widespread evacuations of production facilities and infrastructure damage. On Tuesday, the Henry Hub price was $2.49 higher than on the previous Friday (pre-Katrina). For the week (Wednesday to Wednesday), the spot price at the Henry Hub increased $2.70 to $12.70 per million British thermal units (mmBtu). This is the highest price recorded at the hub since February 2003. Note: Spot trading in natural gas was suspended at the Henry Hub on Monday due to a shut-in of the hub from Sunday evening to mid-day Monday as a result of Hurricane Katrina.
The amount of natural gas in storage in the East Region increased 3.5% for the week ending August 26 to 1,503 billion cubic feet which was 38 billion cubic feet above the 5-year average. Nebraska is a part of the East Region (see map) which is a major natural gas consumer, particularly in the residential and commercial sectors. The industrial sector, which includes agriculture, is also a major consumer in this state. Most of the gas is supplied from the Producing Region with a fair amount imported from Canada. The Henry Hub in southern Louisiana is a major market center with interconnections for many of the pipelines that transport U.S.-produced gas to the East Region. Furthermore, the Henry Hub is the preferred reference point for prices for most of the domestic gas destined for the East. Therefore, market conditions and developments in the East Region and price movements and trends at the Henry Hub are usually highly correlated.
Notes: An archive is available. Divide the price by ten (10) to obtain the price per hundred cubic feet (ccf) or the approximate price per therm.