Thursday, January 19, 2012

Storage: Up, Up, Up; Prices: Down, Down, Down

It's been hard to watch natural gas prices plummet over the past few weeks as storage levels have remained stubbornly high.  A reader makes a good point in a comment today that it's especially difficult to watch this story when we are comparing current data to averages that are themselves bloated.  Because the five year average that is used as a standard comparison is a rolling average of the previous five years, the record levels of storage for the past three years have served to skew that average upwards making it a less useful measure.

As the table below shows, the current maximum average storage level for the past five years was 3.705 Tcf.  Back in 2005, it maxed out at 3.106 Tcf, a 599 Bcf difference from today.  Of course, since then there has been new storage added, but the trend is clear.


To make your stomach churn, the current storage level is 3.29 Tcf, 184 Bcf higher than the maximum average from 2005, and we are eight weeks into the withdrawal season that got off to a late start.  If you're like me, you need to see it as a picture for it to sink in.  Here it is, grab your barf bags, put your head between your knees and prepare for a very rough ride.

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