In the Midwest, space-heating demand remained strong this week as cold weather continued. Natural gas spot prices increased with the strong space-heating demand and the increase in crude oil prices. On February 20, the Henry Hub natural gas spot price was $9.08 per million British thermal units (mmBtu), which was 73 cents, or 8.7 percent, higher than the price of $8.35 last Wednesday. This Wednesday's price of $9.08 was 21 percent higher than the price of $7.51 per mmBtu on the third Wednesday in February, 2007.
The amount of natural gas in storage in the East Region decreased 11.2 percent to 952 billion cubic feet for the week ending February 15, which was 52 billion cubic feet above the five-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.
A general rule of thumb: Add three dollars to the Henry Hub spot price to estimate the residential natural gas price. Likewise, add 30 cents if you have already converted the price from British thermal units to ccf or therms.
|Note: NA = Not available.|
Sources: Natural Gas Weekly Update. Energy Information Administration, Washington, DC. Nebraska Energy Office, Lincoln, NE.
This report was updated on February 21, 2008.
Typically, there is one week between updates.