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Hurricane Fallout: Natural Gas Prices On The Rise

POSTED: 5:33 pm EDT September 28, 2005
UPDATED: 5:53 pm EDT September 28, 2005

The combined effects of Hurricanes Katrina and Rita will stretch natural gas supplies and result in higher heating costs this winter. If you heat your home with natural gas, this coming winter promises to be either very expensive or very cold.

An industry group said Wednesday consumers can expect a huge jump in heating costs after the hurricanes that struck at the heart of U.S. oil and gas production.

The storms have not only affected offshore oil platforms and gas refineries-- they've also disrupted natural gas production in the Gulf of Mexico. So far, nearly 5 percent of the yearly output of natural gas has been lost during this historic hurricane season.

"It's likely to go down as the most significant storm season to ever impact the natural gas industry," said Joseph Blount of the Natural Gas Supply Association.

It means higher prices to heat homes this winter -- all because supply will have to strain to keep up with demand.

Facing greater demand, the natural gas industry was on pace to expand production this year. Then Hurricanes Katrina and Rita came. Now, the industry is predicting overall output will only be about the same as last year.

"We also must keep in mind that extended damage from Rita or additional storms could further tighten supply," said Blount.

Despite the strain on the market, industry experts say there won't be any shortages.

Additional supply will come from gas that has been stored and imports from Canada -- though both sources are more costly than domestic production.

While the natural gas industry isn't estimating exactly where prices will end up, a recent energy department prediction called for a 47 percent price hike nationwide.
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