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Hurricane Katrina and Natural Gas Supply

By Eric McErlain
Our friend Rod Adams takes note of how Hurricane Katrina is disrupting America's domestic natural gas supply at a particularly inopportune time:

This is supposed to be the beginning of the "storage" season when demand from air conditioning begins to fall and heating demand has not yet picked up. It is the time of year when the salt caverns that serve as storage facilities for methane are filled up so that there is adequate capacity to respond to those cold winter days. Because of the lowered demands in the electricity market, prices during this time of year are traditionally a bit lower, thus helping to keep the cost for gas in the winter lower than it would have been.

This cycle is being disrupted. Not only are prices high, but there is limited production and transportation available for the gas that would be stored. It might become a very cold and expensive winter for some people, a prospect that seems almost hard to contemplate right now.
All too true. Since 1992, America has built an abundance of natural gas-fired electric capacity, and that's put tremendous pressure on natural gas markets. The disruption of supply from Hurricane Katrina is sure to hurt this Winter.

Technorati tags: Hurricane Katrina

Comments

Kevin McCoy said…
Supply disruptions are always a problem, but Rod's comments remind me of one of the strengths of nuclear: There is a large inventory of fuel in the core. Most U.S. plants operate on 18-month refueling cycles, so a disruption in fuel supply, even for a month, will usually not cause the plant to go down.
September 2, 2005 at 12:22 PM
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