NWGA Releases White Paper Exploring Natural Gas Prices in the Pacific Northwest

Author: NWGA Staff
Updated 2008

In this White Paper:

Why prices are at current levels What the industry is doing to manage prices How public policies affect prices

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nergy prices in the Pacific Northwest remain among the lowest in North America. Nevertheless, they have risen dramatically over the last few years, largely tracking price increases across North America. As wholesale electricity and crude oil prices scaled new heights, average natural gas prices more than doubled between January 2002 and January 2005. Average wholesale prices in 2005 hovered around $6 per Mcf compared to $5.49 in 2004, $4.88 in 2003 and $2.95 in 2002. In addition wholesale prices fluctuated between $2 and $10 per Mcf, making natural gas the second most volatile of traded commodities behind electricity. Higher prices for natural gas and gas price volatility are expected to continue in the near term.

A complex interplay of factors contribute to energy price volatility – some natural (such as weather-related events), some manmade, some regional and some global.

But this does not mean energy prices are beyond our influence. By examining and understanding these variables and working together to craft effective energy policies, the region’s energy industry, consumers and policy makers can help to mitigate future increases.

This white paper explores some of the key factors influencing natural gas prices in the Pacific Northwest. In addition, the paper sheds light on existing efforts of the the natural gas industry to manage price risks for Pacific Northwest customers. Finally, the paper examines the affect public policy choices may have on future prices.