Natural Gas Prices Drop Temporarily

Average monthly spot prices for natural gas fell sharply for February contracts, especially in the highest-cost regions of the country such as New York/New Jersey and California, according to data released by Platts, the energy market information division of The McGraw-Hill Companies.

However, the drop is more a sign of the market's volatility, caused by the tight-supply-demand balance than a long-term trend, Platts says.

The average price of natural gas delivered to New York and New Jersey markets for February 2001 dropped 59 percent, to $8.02/MMBtu from $19.33 in January 2001.

However, the February average is still about 54 percent higher than the February 2000 average of $5.21/MMBtu.

In Southern California, which has strong demand for natural gas from power plants, the average monthly spot price for February dropped to $12.51/MMBtu, down from $16.39 in January, though still more than 390 percent higher than the February 2000 average of $2.55.

On a national basis, the average monthly spot price for supply areas dropped 34 percent this month, to $6.23/MMBtu from $9.88 in January. But this February's average still remains 147 percent above the February 2000 average of $2.52.