Stan Geiger

Natural Gas: The Quiet Problem

The price of oil grabs a lot of headlines these days. But there is another piece of the energy mosaic that has quietly become problematic. And things could get much, much worse.

The price of natural gas has been inching up for quite a while now. The price is currently over $13 per thousand cubic feet, which nearly matches the record high price set in the aftermath of Hurricanes Katrina and Rita a couple of years back.

We've been fortunate since those days. No storm of significance has gotten loose in the Gulf of Mexico. But we are officially in hurricane season now, and our luck can't hold forever.

The Gulf of Mexico, along the coasts of Texas and Louisiana, is the biggest gas-producing region in the country. When a storm shows up, production has to be shut down and the facilities evacuated. Turning that production back on isn't like flipping a light switch. It takes time. In the meantime, that production is off line.

The late summer and early fall months are typically a time when the industry is filling underground storage tanks in preparation for the coming winter. If the Gulf production is shut down, there is no excess to put in the storage tanks. And that could mean shortages in the winter months.

With prices already running at near-record levels, if a major storm this summer forces a shutdown in the Gulf, and if we then experience a particularly harsh winter, pick a number. Nat gas would surely top $20 per thousand. It might even hit $30. And utility bills would go through the freakin' roof.

Hey, just thought I'd brighten your holiday weekend a bit.

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