Northeast Facing All-time High Natural Gas Prices

Association of Business Training
January 29, 2014 — 911 views  

While the temperatures are dipping to single digits around the Northeast, the price of one of the major sources of relief and warmth- natural gas- seems to be on an all new high. While the temperature in New York came down to seven degrees, the price of delivering natural gas in the city rose to $120 per million BTU in the spot market. This price rise is a record in itself as it is 30 times more than the price of an equal amount of gas obtained from Marcellus Shale in Pennsylvania, which is also the biggest gas field of the country.

Natural Gas Prices on an All-High

A major amount of natural gas that is used in the country is brought on long term contracts with forward and future contracts, which means that most of the consumers in the northeastern United States will not instantly face the burn of this rise hike instantly. However, the prices are not completely insulated and the spot market exists for a reason. More or less, it is a refuge for those who are unprepared and need to buy or sell immediately. So when there are instances of this sort where power plants fired by natural gas or any other utilities find themselves falling short, their schedulers and traders are left with no option but to resort to the spot market and buy no matter how high the prices are. Presently, the ones in the Northeast that are jumping into the spot market are paying a record amount for natural gas.

Vice President of PSEG Power, a gas supply company, John Scarleta, mentioned that he has never seen a price rise of this sort. He said that the current prices are unbelievable and that the company used to buy higher-cost gas for the same price. PSEG Power, which is a subsidiary of Public Service Enterprise Group based in New Jersey, has begun running low on its stock required for running its few power-plants fired by natural gas, all located in New Jersey.

Someone's Loss, Someone's Gain

On the other hand, this means that a lot of money is being made by the other party. Managing member of Mada Group and a natural gas trader himself, Adam Hoffman, feels that traders of natural gas have turned very powerful and the utilities in need of natural gas have no option but to go by the rules of the traders.

Association of Business Training