United States Government Accountability Office

GAO Testimony 

Before the Permanent Subcommittee on 

Investigations, Committee on Homeland 

Security and Governmental Affairs, United 

States Senate

NATURAL GAS

Factors Affecting Prices and 

Potential Impacts on 

Consumers 

Statement of Jim Wells, Director 

Natural Resources and Environment 

For Release on Delivery

Expected at 8:30 a.m. CST 

Monday, February 13, 2006 

 

GAO-06-420T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

February 13, 2006

NATURAL GAS

Factors Affecting Prices and Potential 

Highlights of GAO-06-420T, a testimony Impacts on Consumers 

before the Permanent Subcommittee on 

Investigations, Committee on Homeland 

Security and Governmental Affairs, United 

States Senate 

In early December 2005, wholesale

natural gas prices topped $15 per 

million BTUs, more than double the

prices seen last summer and seven 

times the prices common during 

the 1990s. For the 2005-2006

heating season, the U.S. Energy

Information Administration

predicts that residences heating

with gas will pay 35 percent more, 

on average, than they paid last

winter. 

This testimony addresses the 

following: (1) the factors causing 

natural gas price increases, (2) how 

consumers are affected by these

higher prices, and (3) the roles 

federal government agencies play

in ensuring that natural gas prices

are determined in a competitive 

and informed marketplace.

This testimony is based on GAO’s 

2002 published work in this area, 

updated through interviews, 

examination of data, and review of

relevant publications. GAO’s new 

work was conducted from

December 2005 through February 

2006 in accordance with generally

accepted government auditing

standards. 

Since 1999, wholesale prices for natural gas have trended upward because of 

expanding demand and supply that has not kept pace. The domestic natural 

gas industry has been producing at near capacity, and the nation’s ability to 

increase imports has been limited. Tight supplies have also made the market 

susceptible to extreme price spikes when either demand or supply change 

unexpectedly. Prices spiked in August 2005 when hurricanes hit the Gulf 

Coast, disrupting a substantial portion of supply and again later when 

demand was pushed higher because of, among other reasons, colder-thanexpected temperatures in early December. Although prices have dropped, 

they remain higher than last year. Other factors—such as market

manipulation—may also have affected wholesale prices. We are currently 

examining futures trading in natural gas markets for signs of manipulation 

and expect to report on our results later this year. 

While most consumers’ gas bills are rising, the degree of the increase

depends, in part, on how much of their supply is purchased from wholesale 

spot markets. Consumers who directly, or indirectly, buy their natural gas 

mainly from spot markets will see prices that reflect both recent price spikes

and the longer-term trend toward higher prices. Our work shows that some 

of the largest natural gas utilities in a few states expect to buy at least 70 

percent of their gas at spot market prices this winter. These companies

generally pass these prices on to their customers. On the other hand, 

consumers and suppliers that have reduced exposure to spot market prices 

because some of their gas has been purchased through a process called 

hedging may be insulated from price spikes and may postpone their 

exposure to even gradual price hikes. In this regard, utilities in more than 

half the states have hedged at least 50 percent of their supply for this winter 

by entering into long-term fixed-price contracts and other techniques. This 

will help stabilize prices for their customers. Nonetheless, high gas prices 

will hit some consumers hard, including lower-income households and 

companies that depend heavily upon natural gas, such as fertilizer 

manufacturers. 

The Federal Energy Regulatory Commission (FERC) and the Commodities 

Futures Trading Commission (CFTC) play key roles in ensuring that natural 

gas prices are determined in a competitive and informed marketplace. Both 

agencies monitor natural gas markets and investigate instances of possible 

market manipulation. Since 2002, FERC has settled a number of 

investigations involving natural gas market manipulation; for example, one 

company agreed to pay a settlement of $1.6 billion after FERC found it had 

exercised market power over natural gas prices in California during the 

2001-2002 heating season. From 2002 through May 2005, CFTC investigated 

over 40 energy companies and individuals, filed over 20 actions, and 

collected over $300 million in penalties, most of which were natural gas 

related. 

www.gao.gov/cgi-bin/getrpt?GAO-06-420T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Jim Wells at 

(202) 512-3841 or wellsj@gao.gov. 
Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss natural gas prices. As you know, 

last fall two powerful and destructive hurricanes, Katrina and Rita, tore 

through the Gulf of Mexico and several states bordering it—an important 

area for the supply of natural gas. By early December 2005, wholesale 

natural gas prices topped $15 per million BTUs, more than double the 

prices seen last summer and seven times the prices common throughout 

the 1990s. For the 2005-2006 winter heating season, the Energy 

Information Administration estimated in January 2006 that residential 

households heating with natural gas will pay $257 (35 percent) more, on 

average, than last winter. Consumers in the Midwest are expected to 

witness even greater increases—paying 41 percent more than last winter. 

This is not the first time that natural gas prices have sharply increased. In

2000-2001, prices rose steadily and remained high for nearly a year. We 

examined this phenomenon in 2002 and found that prices went up mainly 

because supplies could not keep pace with rising demand.1

 We also 

reported that federal agencies responsible for overseeing aspects of the 

natural gas market were actively investigating whether market participants 

had violated market rules or manipulated prices.

Concerned about the recent increases in natural gas prices and the 

implications of these increases on consumers in the United States, you 

asked us to address the following: (1) the factors causing natural gas price

increases, (2) how consumers are affected by these higher prices, and (3) 

the roles federal government agencies play in ensuring that natural gas 

prices are determined in a competitive and informed marketplace. 

Our testimony today is based on our prior reports, interviews, and a 

review of recent reports published by others. Prior related GAO products 

are listed at the end of this statement. To update our findings from those 

reports, we conducted interviews with federal agencies that included the 

Energy Information Administration, the Federal Energy Regulatory 

Commission, and the Commodities and Futures Trading Commission. We 

also interviewed the state commissions that oversee natural gas utilities, 

selected trade associations representing the natural gas industry, and 

other potentially affected industries. Further, we examined data on the 

 1

GAO, Natural Gas: Analysis of Changes in Market Price, GAO-03-46 (Washington, D.C.: 

Dec. 18, 2002). 

Page 1 GAO-06-420T 
natural gas industry, including prices, consumption, and supplies. In 

addition, we reviewed relevant reports and other documents published by

others. We conducted our work from December 2005 to February 2006 in 

accordance with generally accepted government auditing standards. 

Since 1999, wholesale prices for natural gas purchased from the shortterm, or spot, market have trended steadily upward because demand has 

expanded faster than supply. The domestic natural gas industry has been 

producing at near capacity, and, to date, the nation’s ability to increase 

imports has reached its limits, given currently available infrastructure. 

Tight supplies have also made the market susceptible to extreme price 

spikes when either demand or supply change unexpectedly. Prices spiked 

in late 2005 when two hurricanes hit the Gulf Coast region, disrupting a 

substantial portion of our natural gas supply. This supply disruption was 

compounded by high demand due to, among other reasons, colder-thanexpected temperatures in early December. As a result, December 

wholesale prices spiked further. Although prices have dropped from these 

highs, they remain higher than last year because some natural gas wells 

and pipelines damaged by the hurricanes remain inoperable and because 

the margin between demand and supply remains narrow. Other factors—

such as market manipulation—may also have affected wholesale prices. 

We are examining futures trading in natural gas and other energy markets 

for signs of market manipulation and we plan to report on the results of 

that work later in 2006. 

Summary 

While the upward trend in natural gas prices is causing higher gas bills for 

most consumers, the degree to which they see their bills rise because of 

high wholesale prices depends on how much of their supply is purchased 

from wholesale spot markets. Consumers who buy most of their natural 

gas from spot markets, or consumers whose suppliers do so on their 

behalf, are likely to see price increases commensurate with both recent 

price spikes and the longer-term trend toward higher prices. According to 

our preliminary work with the state commissions that oversee natural gas 

utilities, some of the largest natural gas utilities in a few states expect to 

buy at least 70 percent of their gas this winter at spot market prices. The 

utilities generally pass these prices on to their customers. Gas utilities and 

consumers that do not obtain their gas through utilities can reduce their 

exposure to spot markets through a process called hedging, which 

includes such techniques as buying gas at fixed prices in long-term 

contracts or storing gas purchased when prices are relatively low to be 

used during times when prices are high. While hedging may not guarantee

the lowest price, it allows consumers to have greater price stability. Our 

Page 2 GAO-06-420T 
preliminary work shows that the natural gas utilities in more than half of 

the states hedged at least 50 percent of their supplies for this winter. How 

consumers are affected by rising natural gas prices also depends on the 

consumer; some consumers are more sensitive to price changes than 

others. For example, lower-income residents may not be able to absorb 

the price increases and may have difficulty paying their bills. According to

trade associations, industrial consumers that are heavily dependent upon 

natural gas, such as chemical and fertilizer manufacturers, may not be able 

to compete with foreign companies that have access to gas at lower prices 

and therefore may reduce operations or close U.S. plants. 

Three federal agencies—the Federal Energy Regulatory Commission 

(FERC), the Commodities Futures Trading Commission (CFTC), and the 

Energy Information Administration (EIA)—play key roles in ensuring that

natural gas prices are determined in a competitive and informed 

marketplace. FERC is responsible for ensuring that wholesale prices for 

natural gas sold and transported in interstate commerce are determined 

competitively. It carries out this responsibility by, among other actions, 

monitoring the markets in which natural gas is traded and investigating 

instances of possible market manipulation. Since 2002, FERC has settled a 

number of investigations involving natural gas market manipulation; for 

example, one company agreed to pay a settlement of $1.6 billion after 

FERC found it had exercised market power over natural gas prices in 

California during the 2001-2002 heating season. Since prices spiked in the 

fall of 2005, FERC has received complaints and identified areas of concern

regarding high prices. Agency officials told us they investigate such 

matters where appropriate and that regulations governing FERC’s 

activities prevent them from disclosing whether any investigations are 

under way. Similarly, CFTC is responsible for ensuring that fraud, 

manipulation and abusive practices do not occur in federally regulated

financial markets such as the New York Mercantile Exchange (NYMEX), 

where some natural gas contracts are traded. CFTC monitors the markets 

for attempted market manipulation and takes enforcement actions, when 

it deems appropriate, such as initiating legal proceedings and imposing 

financial penalties. From 2002 through mid-2005, CFTC investigated more 

than 40 energy companies or individuals and assessed penalties totaling 

over $300 million, most of which concerned natural gas-related 

settlements. FERC and CFTC recently signed a memorandum of 

understanding in an effort to work together more effectively. EIA 

publishes information about natural gas markets, including aggregate 

estimates of supply and demand and average prices. 

Page 3 GAO-06-420T 
Natural gas is a colorless, odorless fossil fuel found underground that is 

generated through the slow decomposition of ancient organic matter. In 

some cases, the gas, composed mainly of methane, is trapped in pockets of 

porous rock held in place by impermeable rock. In other cases, natural gas 

may occur within oil reservoirs or in coal deposits.2

 Natural gas is 

extracted via wells drilled into the porous rock. The natural gas is then 

moved through pipelines and processing plants to consumers. 

Background 

Historically, domestic natural gas production has occurred largely in 

Texas, Oklahoma, and Louisiana. In more recent years, as older fields have

been depleted, the Rocky Mountain region, Alaska, and areas beneath the 

deeper waters of the Gulf of Mexico are becoming increasingly important 

in supplying natural gas; however, in many cases these supplies are not 

near pipelines and other infrastructure needed for getting the gas to 

markets, which increases the costs of gas obtained from the newer fields. 

Natural gas consumers include 

• residential users living in houses, apartments, and mobile homes; 

• commercial users such as stores, offices, schools, places of worship, and 

hospitals; 

• industrial users covering a wide range of facilities for producing, 

processing, or assembling goods, including manufacturing, agricultural, 

and mining operations; 

• entities that use natural gas to generate electricity and provide that 

electricity to others, such as regulated electric utilities and competitive 

suppliers of electricity; and 

• the transportation sector, including pipeline companies, which use natural 

gas to operate the pipeline networks, as well as those using natural gas to

power cars and buses. 

Most residential and commercial consumers rely on natural gas utilities to

supply their gas. Industrial consumers and electricity generators obtain 

their gas through a variety of means, including buying it directly from spot 

markets and natural gas utilities. 

 2

Natural gas occurring within oil deposits is referred to as “associated natural gas.” Natural

gas found in coal deposits is referred to as “coal-bed methane.” 

Page 4 GAO-06-420T 
The demand for natural gas in the United States has generally been 

seasonal, with peak demand during the winter heating months. From April 

through October, companies typically purchase natural gas and place it 

into underground storage facilities located around the country. Later, as 

the seasonal demand increases, these stored supplies of natural gas are 

used to augment the supplies provided via pipelines. According to EIA, 

natural gas demand during winter months is usually 1.5 times greater than

monthly natural gas production in other months. 

Over the past 25 years, the wholesale natural gas supply market has 

evolved from a highly regulated market to a largely deregulated market,

where prices are mainly driven by supply and demand. While the regulated 

market ensured stable prices, it also caused severe gas supply shortages 

because, with artificially low prices, producers had no incentive to 

increase production and consumers had no reason to curtail their demand. 

Before implementation of the Natural Gas Policy Act of 1978, which began 

deregulation of wholesale natural gas prices, the federal government 

controlled the prices that natural gas producers could charge for the gas 

they sold through interstate commerce. Under this regulatory approach, 

producers located natural gas reserves, drilled wells, gathered the gas, and 

sold it at federally controlled prices to interstate pipeline companies. After 

purchasing the natural gas, pipeline companies generally transported and 

sold the gas to local distribution or gas utility companies. These 

companies, under the oversight of state or local regulatory agencies, then

sold and delivered the gas to their consumers, such as homeowners. 

In today’s restructured market, the retail prices that consumers pay are 

still regulated in many states and reflect the prices paid by their suppliers 

to acquire the natural gas. However, the federal government does not 

control the wholesale price of natural gas. Since the removal of federal 

price controls, the wholesale price of natural gas decreased initially and 

has become more volatile. Producers still locate and gather natural gas, 

but they now sell the gas at market-driven prices to a variety of companies, 

including marketers, broker/trader intermediaries, and a variety of 

consumers. New market centers have emerged, including a market center 

referred to as the Henry Hub, located in Henry, Louisiana. Henry Hub 

Page 5 GAO-06-420T 
prices are reported on a daily basis, and trades made at that market are 

often used as benchmarks for other natural gas trades.3

The various players in the market may sell gas back and forth several 

times before it is actually delivered to the ultimate consumers. In some 

cases—in spot markets, for example—natural gas is sold for immediate 

delivery.4

 In other cases, it may be sold for delivery in the future, through a 

variety of what are called futures markets. In addition, several types of 

financial derivatives related to natural gas—contracts whose market value

is derived from the price of the gas itself—can be bought and sold through 

numerous sources by entities that are interested in protecting themselves

against increases in the price of natural gas. Derivatives include natural 

gas futures and options, and derivative prices typically move in parallel 

with the spot market.5

 Derivatives markets include exchanges such as the 

New York Mercantile Exchange, which is regulated by the CFTC; and the 

Intercontinental Exchange, which operates as an exempt commercial 

market without CFTC oversight but over which CFTC has antimanipulation and anti-fraud authority; and off-exchange and over-thecounter (OTC) markets, which are not subject to general federal 

regulatory oversight. 

 3

The Henry Hub is the largest centralized point for natural gas spot and futures trading in 

the United States. The New York Mercantile Exchange (NYMEX) uses the Henry Hub as the 

point of delivery for its natural gas futures contract. NYMEX deliveries at the Henry Hub 

are treated in the same way as cash-market transactions. Many natural gas marketers also 

use the Henry Hub as their physical contract delivery point or their price benchmark for 

spot trades of natural gas. 

4

According to the American Gas Association, the term spot market refers to a market in 

which natural gas is bought and sold for immediate or very near-term delivery, usually for a

period of 30 or fewer days. 

5

A futures contract is an agreement to buy or sell a commodity for delivery in the future at

a price, or according to a pricing formula, that is determined at initiation of the contract. 

An obligation under a futures contract may be fulfilled without actual delivery of the

commodity by, for example, an offsetting transaction or cash settlement. An option gives 

the buyer the right, but not the obligation, to buy or sell a commodity at a specific price on 

or before a specific date. 

Page 6 GAO-06-420T 
Since 1999, wholesale prices for natural gas have trended steadily upward 

due to expanding demand—largely for electricity production—and supply 

that could not expand as quickly because the industry is already operating

at near capacity. This tightness in the demand and supply balance has also 

made the market susceptible to extreme price changes in times when 

either demand or supply change unexpectedly. One such period of 

extreme price changes occurred in late 2005, when two hurricanes hit the

Gulf Coast region, disrupting a substantial portion of the domestic supply 

of natural gas. Prices spiked to high levels and, although they have since 

dropped, they remain unusually high today. 

Since 1999, wholesale natural gas prices have risen steadily, as 

demonstrated by the moving average in figure 1. Previously, in the early

and mid-1990s, prices were generally low, usually ranging from $2 to $3 

per million BTUs, adjusted for inflation. From January 1999 through July 

2005, however, average wholesale prices increased by over 200 percent, 

rising from about $2 to $6.75 per million BTUs. Most recently, in the last 

half of 2005, prices rose to over $15 per million BTUs, sevenfold higher 

than prices seen in the early 1990s. 

Increasing Demand 

and Tight Supply 

Have Driven Up 

Prices and Made 

Extreme Price Spikes 

Possible 

Trend toward Higher 

Prices in Recent Years Is 

Due Largely to Market 

Forces 

Figure 1: Wholesale Natural Gas Prices at Henry Hub, in 2004 dollars 

0

2

4

6

8

10

12

14

16

18

$20

Oct. 

Jan.

July

Jan.

July

Jan.

July

Jan.

July

Jan.

July

Jan.

July

Jan.

July

Jan.

July

Jan.

July

Jan.

July

Jan.

July

Jan.

July

Jan.

1993 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 1994

200-day moving average

Henry Hub spot prices (daily)

Price (per million BTUs)

Source: GAO analysis of data provided by Global Insight, Inc.

Page 7 GAO-06-420T 
A combination of market forces has caused the upward trend in wholesale 

natural gas prices since 1999. Demand for natural gas has been growing 

rapidly since the mid-1980s, with total consumption increasing by about 38 

percent from 1986 through 2004. Figure 2 illustrates the extent to which 

consumption of natural gas has risen in the United States over the past 2 

decades and the relative amounts used by each of the five types of 

consumers: residential, commercial, industrial, electricity generators, and 

transportation. 

Figure 2: Consumption of Natural Gas by Sector, 1986-2004 (with 2004 Percentage of Total) 

0

5

10

15

20

25

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004P

Total consumption (trillion cubic feet)

Transportation, 3%

Residential, 24%

Electric generation, 22%

Industrial, 38%

Commercial, 13%

Source: GAO analysis of Energy Information Administration data. 

A significant share of the increased demand in recent years has resulted 

from increased use of natural gas to generate electricity. Out of concern 

regarding the supply of natural gas and other factors, construction of 

power plants using oil or natural gas as a primary fuel was restricted from 

1978, when the Powerplant and Industrial Fuel Use Act (Fuel Use Act) 

took effect, through 1987, when it was repealed. After the Fuel Use Act’s 

repeal, use of natural gas by the electric generation sector increased by 79 

percent from 1987 through 2004. Newer gas-powered plants produce low 

levels of pollutants, compared with many existing plants. This 

characteristic, as well as the long period of low prices in the 1990s and 

other factors, has made natural gas the primary fuel in new power plants. 

Page 8 GAO-06-420T 
The supply of natural gas, however, has not kept pace with the increased

demand. Historically, most of the natural gas used in the United States—85 

percent in 2003—has been produced here. However, as older natural gas 

fields have been depleted, additional drilling for natural gas has been 

required in order to maintain domestic production. This additional drilling 

has not necessarily resulted in immediate additional supplies in part 

because development of new wells and supporting pipeline infrastructure 

can take time. Overall, from 1994 through 2003, domestic annual 

production held steady at about 19 trillion cubic feet. In 2003, EIA 

reported that the domestic natural gas industry had produced nearly all of

the natural gas that could be produced on a monthly basis from 1996 

through 2001—the most recent data then available. Furthermore, EIA 

reported that at times there was virtually no spare capacity in some parts 

of the country and forecasted that these tight supply conditions would 

continue, despite EIA’s projection for a significant increase in drilling 

activity. 

In recent years, imports of natural gas have become increasingly 

important. Net imports of natural gas have increased steadily, rising by 

over 250 percent from 1987 through 2004. In 2004, the United States 

imported about 15 percent of the total natural gas consumed here. Nearly 

all of the imported gas comes from Canada via pipeline, and those imports 

constitute virtually all of Canada’s production not used in that country. In

addition, a small share—about 3 percent of total U.S. supply—has been 

shipped on special ocean tankers as liquefied natural gas (LNG) from 

countries such as Trinidad and Tobago, Nigeria, and others. These imports 

have increased significantly in recent years; however, it is not clear if we 

have the capacity to handle further increased shipments, in part because 

only five facilities in the United States are able to receive and process LNG 

imports. Moreover, because of limited international supplies and high 

prices in other markets, it also is not clear how much additional supply is 

available to the United States. 

Extreme Price Spikes 

Resulted from Tight 

Demand and Supply 

Conditions 

The tight demand and supply balance has made the market for natural gas 

more susceptible to extreme price changes when demand or supply 

changed unexpectedly. As we previously reported, prices spikes occur 

periodically in natural gas markets because neither the demand side nor 

the supply side can quickly adjust to changes in the marketplace. On the 

demand side, some customers are able to react to changes in prices. For 

example, some industrial entities may be able to switch fuels or reduce 

their production. However, many other customers, such as residential 

customers, may have few fuel-switching options and little firsthand 

Page 9 GAO-06-420T 
knowledge of spot natural gas prices—and understand the costs of their 

natural gas consumption only when they receive their bill. On the supply 

side, suppliers are slow to respond to price changes. For example, they 

may be delayed in responding to high prices because, as noted earlier, 

existing domestic sources of natural gas are already operating at near full

capacity—often above 90 percent in the United States in recent years, 

according to EIA. In these circumstances, because little excess supply is 

readily available, it must be added, generally by drilling new wells and 

connecting those wells to existing pipelines, which can take time. For 

example, receiving regulatory approval can take a year or more, and the

time to drill the well and connect it to the pipeline network can take 

another 6 to 18 months. Because neither the suppliers nor many 

consumers can react quickly to price changes, even small unexpected 

increases in demand or disruptions in supplies can cause sudden and 

significant price increases. 

Most recently, prices rose sharply following the landfall of two hurricanes 

in the Gulf region. It appears that the price spike was caused by the 

unexpected decrease in the supply of natural gas in late 2005 following 

Hurricanes Katrina and Rita, exacerbated by factors that raised demand. 

Because of the damage caused to production, processing, importing, and 

transporting infrastructure in the Gulf region, wholesale prices climbed to 

a high of $15 per million BTUs by December 2005. Other factors—such as 

market manipulation—may also have affected wholesale prices. Our 

ongoing work examining futures trading in natural gas markets will 

address this issue later this year. 

High Prices in Late 2005 

Resulted from Supply 

Disruptions Caused by 

Hurricanes Katrina and Rita 

The Gulf region produces about 20 percent of the U.S. natural gas supply. 

The region’s extensive natural gas-related infrastructure includes about 

4,000 platforms that extract natural gas from beneath the ocean floor; two 

of the five terminals that import LNG into the United States; plants that 

remove impurities from natural gas to prepare it for sale and use; and an

extensive network of pipelines, linked by hubs such as the Henry Hub, that 

transport natural gas to other parts of the United States. 

The paths of Hurricanes Katrina and Rita, in relation to Gulf region natural 

gas infrastructure, are shown in figure 3. The hurricanes forced operators 

to evacuate about 90 percent of the oil and gas platforms in the Gulf for 

safety reasons, rendering them unable to produce natural gas; shut down 

one of the two LNG importing terminals for about two weeks; damaged 

processing plants; and damaged several pipelines and their connecting 

hubs, delaying transmission of natural gas from supply facilities that were 

Page 10 GAO-06-420T 
still operational. For example, the Henry Hub, a major gas market center, 

was closed by flooding for a total of 11 days following Katrina and Rita. 

Figure 3: Path of Hurricanes Katrina and Rita Relative to Oil and Natural Gas Production Platforms

Houston Henry Hub New Orleans

Oil or natural gas platform

Storm track for eye of Katrina

Storm track for eye of Rita

Hurricane force winds—Katrina

Hurricane force winds—Rita

Source: GAO analysis of data provided by the National Weather Service and the Minerals Management Service.

As a result of all of these factors, the hurricanes had a significant impact 

on the supply of natural gas. Figure 4 shows the impact of Hurricanes 

Katrina and Rita on the production of natural gas from the Gulf region. 

Hurricane Katrina disrupted about 8 billion cubic feet of natural gas 

Page 11 GAO-06-420T 
production per day immediately following its landfall—amounting to 

about 80 percent of daily production from the Gulf and about 16 percent of

total daily U.S. production of natural gas. Lost production from Katrina 

was in the process of being restored when Hurricane Rita struck—again 

reducing production of natural gas from the Gulf region to levels similar to 

those immediately following Katrina. As a result of the severity and timing 

of these two hurricanes, the Gulf region produced less than half its usual 

amount of natural gas for about 9 weeks after Hurricane Katrina struck. By 

comparison, nearly all of the lost production that resulted from Hurricane 

Ivan in 2004 was restored within 9 weeks and amounted to about 20 

percent of that caused by Katrina and Rita. By the end of January, only 

about 80 percent of the natural gas supplies that had been disrupted by 

Katrina and Rita had been restored, leaving the overall market tighter than

it was prior to the hurricanes and leaving the U.S. vulnerable to future 

unexpected interruptions in supply or increases in demand—either of 

which could result in higher prices. 

Figure 4: Daily Natural Gas Production from the Gulf of Mexico Following Landfalls of Hurricanes Katrina and Rita

0

2,000

4,000

6,000

8,000

10,000

12,000

Production restored after Hurricane Katrina

January 2006

December 2005

November 2005

October 2005

September 2005

August 2005

Average production pre-Katrina

August 29, 2005: 

Katrina landfall

September 24, 2005:

Rita landfall

Gas production (million cubic feet)

Source: GAO analysis of data provided by Energy Information Administration and the Minerals Management Service.

Page 12 GAO-06-420T 
The high natural gas prices that followed the Katrina and Rita supply 

disruptions came at a time when demand for natural gas was already high. 

Higher-than-average late-summer temperatures in August had led to 

increased demand for natural gas to generate electricity, particularly in the 

South. As a result of this high level of demand, existing supplies were 

stretched thin and overall price levels were high. In addition, the 

hurricanes struck as companies were filling their storage of natural gas in

preparation for the winter heating season. 

Prices for natural gas in both the spot and the futures market spiked 

dramatically immediately following the supply disruptions caused by the 

2005 hurricanes. In September 2005, after the second hurricane, natural 

gas spot prices increased to over $15 per million BTUs—roughly twice as 

high as the average price in July 2005 of about $7.60 per million BTUs. 

Futures prices to deliver gas in October also doubled to $14.20 per million 

BTUs, reflecting traders’ expectations that high spot prices could continue

into the future. Futures prices closely followed spot prices until early 

November 2005, when spot prices fell to about $9 per million BTUs, but 

prices for December gas futures remained at about $12 per million BTUs, 

reflecting the belief by futures market traders that natural gas prices 

would be high in December. A brief cold spell during the beginning of 

December increased demand for natural gas for heating purposes, driving

prices up. The arrival of warmer than normal temperatures just before the 

end of the year reduced demand and has contributed to the recent 

reduction in prices. Figure 5 shows the spikes in natural gas prices during 

the months of, and following, the 2005 hurricanes. 

Page 13 GAO-06-420T 
Figure 5: Prices for Natural Gas in the Spot and Futures Markets, August 2005 to January 2006 

0

2

4

6

8

10

12

14

$16

Future prices, NYMEX next month contract price (e.g., prices in August reflect trading on contract

for September delivery)

January 2006

December 2005

November 2005

October 2005

September 2005

August 2005

Henry Hub spot prices (daily)

Price (per million BTUs)

Source: GAO analysis of data provided by Energy Information Administration and Global Insight, Inc., and Platts.

Hurricane Katrina

Hurricane Rita Low December temperatures

Note: Because the Henry Hub was closed for one day on August 29, 2005, and for 10 days from 

September 23 through October 6, 2005, prices for these dates were based on estimates taken either

from a nearby natural gas hub or from the previous day’s price.

Two other instances of price spikes—caused by unexpected increases in

demand—have occurred since 1999. First, coincident with the western 

electricity crisis, from mid-2000 through early 2001, wholesale prices for 

natural gas rose substantially and remained relatively high for nearly a 

year. This period witnessed significant increased demand for natural gas 

by the electric generation sector in order to meet electricity demand 

across the West during a year of diminished availability of hydroelectricity, 

a situation compounded by high demand through the winter and lowerthan-normal storage levels. In a second instance, wholesale prices rose 

sharply in February 2003 during a period of high demand because of 

unusually cold winter temperatures; however, prices returned to normal 

relatively quickly. 

Price Spikes in 2001 and 2003 

Were Caused by Unexpected 

Increases in Demand 

Page 14 GAO-06-420T 
How higher wholesale natural gas prices are affecting consumers depends 

largely on the degree to which the consumers or their suppliers may have 

purchased gas on the spot market—which reflects current wholesale 

prices—or may have taken steps to reduce their exposure to these prices.6

The effect of higher prices also depends on the consumer’s sensitivity to 

price changes. Some consumers, such as low-income residents and certain 

industries, are more sensitive to price changes than others. 

Impact on Consumers 

of Higher Wholesale 

Natural Gas Prices 

Depends on the 

Extent to Which They 

Buy from Spot 

Markets and on Other 

Factors 

Higher Wholesale Prices 

May Lead to Significant 

Increases in Energy 

Expenditures for 

Consumers Exposed to 

Spot Markets 

The impact of recent increases in natural gas wholesale prices on 

consumers depends on how much of the natural gas they use is purchased

in spot markets. Those with the greatest reliance on spot markets are hit 

the hardest when prices rise or spike. For example, some natural gas 

utilities that relied on spot markets are spending significantly more on 

energy this winter, which may translate into higher gas bills for residential 

and commercial consumers. According to our preliminary work with the 

state commissions that regulate natural gas utilities,7

 10 states reported 

that at least some of the natural gas utilities they regulate were highly 

exposed to spot market prices. Furthermore, in a few states, some of the 

largest natural gas utilities projected they would purchase 70 percent or 

more of their natural gas supplies for this winter from the spot market. 

Participants in the market, such as industrial consumers who purchase gas 

directly from the market or natural gas utilities that purchase gas on behalf 

of their customers, can hedge against high spot market prices for natural 

gas in three main ways: (1) by purchasing and storing gas for use during 

times when prices are high; (2) by signing fixed-price contracts for 

delivery of the gas in the future; and (3) by purchasing financial 

instruments, such as options or derivatives, that increase in value as 

natural gas prices rise. Since the winter of 2000-2001, some state public 

utility commissions (PUCs) have encouraged the natural gas utilities they 

regulate to hedge some part of their gas purchases in order to help 

stabilize prices, according to the American Gas Association. According to 

 6

Other costs reflected in consumers’ retail bills, such as transportation and pipeline 

maintenance, compose a substantial part of the final retail bill but are relatively stable. 

7

The preliminary work is part of a larger effort that we will complete later this year.

Page 15 GAO-06-420T 
the state commissions, 27 states reported that the utilities they regulate 

will acquire at least half of their expected winter natural gas needs at a 

known price, generally ranging from $7 to $10 per million BTUs. In that 

regard, last November, Commissioner Donald Mason of Ohio told 

Congress that customers around Dayton, Ohio, have saved about $3 per 

million BTUs as a result of hedging, including use of long-term, fixed- price 

contracts. Gas utilities are also taking other approaches to keep down or 

stabilize their customers’ costs. For example, in some states, utilities offer 

“level” payment programs and show customers how to use energy wisely 

through energy-efficient appliances. In Minnesota, in 2005, all statejurisdictional gas utilities are required to spend at least 0.5 percent of their

gross operating revenues on conservation improvement efforts such as 

weather audits, weatherization, and rebates for purchases of energyefficient appliances. While some gas utilities have made efforts to reduce 

their exposure to spot prices by increasing their use of hedging, as some 

did after the price spike in 2000-2001, some states and municipalities still 

discourage the use of hedging, according to the association that represents 

the public utility commissioners. 

While hedging allows consumers to obtain greater price stability, it has 

costs and risks, and utilities may lack incentives to undertake it. Storing 

gas for later use, for example, entails up-front costs such as the cost of 

placing it into and keeping it in storage. Market participants face risks if, 

for example, they purchase gas in advance under a fixed-price long-term 

contract and prices drop. For that reason, some natural gas utilities may 

be reluctant to enter into long-term contracts when prices are relatively 

high, according to a trade association that represents municipal gas 

utilities. Furthermore, absent specific PUC guidance to hedge purchases, 

gas utilities may have few incentives to hedge since they are generally able

to pass along increased costs associated with purchases of natural gas. 

Moreover, some state regulators may not allow gas utilities to financially 

benefit from using hedging but hold them financially responsible if the 

hedge proves unnecessary. Furthermore, while under some circumstances 

hedging can reduce or eliminate the impact of a price spike, it may offer 

little benefit during prolonged periods of price changes. For example, a 

utility that signed a 5-year commitment to purchase natural gas at a 

predetermined price may witness no change in the cost of acquiring the 

natural gas during the period of the contract but would again face market

prices (either higher or lower) when it came time to replace this gas 

supply at the end of the contract. In this sense, hedging may serve to delay 

until the contract term ends, but not prevent, the effect of higher or lower 

prices on consumers. 

Page 16 GAO-06-420T 
Some Consumers Are 

More Sensitive to Price 

Changes 

Because energy costs account for a relatively large share of overall costs

for some consumers or because they are heavily dependent on natural gas, 

any price increases can present significant difficulties. In particular, lowincome residential consumers and some highly energy intensive industries 

appear likely to encounter the greatest impact. 

The effect of high natural gas prices has already been especially severe on

low-income individuals. According to representatives from a trade 

association representing publicly owned natural gas utilities, a utility in 

Philadelphia, Philadelphia Gas Works, has billed $42 million more than 

they have collected so far this winter, representing an increase of 2 

percent in uncollectible heating bills this winter compared with last 

winter. In Kentucky, utilities this winter have witnessed the highest 

number of complaints and the greatest number of problems faced by

customers. Furthermore, federal assistance to low-income households in 

meeting heating expenditures provides only limited assistance. According

to the National Association of State Energy Officials, the Low Income 

Home Energy Assistance Program (LIHEAP)8

 currently serves only 20

percent of the eligible population, with average payments of $311 per 

family designed to help families pay projected natural gas heating 

expenditures of $1,568 this winter. Additionally, despite several years of 

increases, LIHEAP funding in fiscal year 2005 is only 67 percent of what it 

was in fiscal year 1982, adjusted for inflation.9

 However, some states have 

increased funding for low-income individuals recently. For example, in 

December, Minnesota began distribution of an additional $13.4 million in

funding designed to assist an additional 26,000 households in paying for 

heating. 

Electricity generators are also sensitive to higher prices because of their 

dependence on natural gas. This is true especially in the eastern United 

States, where, according to FERC, electricity generators rely heavily on 

natural gas. Furthermore, the region has many of the newer gas-fired 

electric power plants that have less flexibility to switch to other fuels, 

 8

LIHEAP is a federally funded program that helps low-income households with their home

energy bills. The federal government does not provide energy assistance directly to the

public, generally providing funding to state-run programs. State-run LIHEAP programs may 

offer bill payment assistance, weatherization, and energy-related home repairs or other 

types of assistance. 

9

Data reflect LIHEAP and weatherization appropriations, supplemental or emergency 

appropriations, and REACH funding. 

Page 17 GAO-06-420T 
such as oil-based fuels, according to the National Petroleum Council and 

others. As a result, some consumers may see higher electricity bills. 

High natural gas prices are also adversely affecting industrial consumers. 

As we reported in 2003, some industrial consumers shut down production 

facilities10 because of higher energy costs in 2000 and 2001. Industry 

representatives expect recent high prices to have a similar effect. A recent

survey by a trade association representing large energy consumers showed 

that more than half of 31 member companies surveyed are decreasing their 

demand for natural gas an average of 8 percent to 9 percent this winter 

compared with last winter, leading the association to conclude that higher 

prices have forced industries to curtail production in the United States. 

The association expects that further cutbacks will occur if prices remain 

high this year. 

According to an association that represents industrial consumers, high 

natural gas spot prices have been particularly detrimental to specific 

industries in the United States that rely on natural gas, such as fertilizer 

and chemical manufacturers, that compete in international markets. As we 

reported in 2003,

11 natural gas expenses can account for 90 percent of the 

total cost of manufacturing nitrogen fertilizer. The high cost of domestic 

natural gas has made it difficult for U.S. producers of nitrogen fertilizer to 

compete with foreign nitrogen fertilizer producers, who can buy natural 

gas at lower prices and export their products to the United States. For 

example, in 2004, Trinidad and Tobago was the largest supplier of 

anhydrous ammonia,12 a type of nitrogen fertilizer, to the United States. 

Prices of natural gas are sharply lower in Trinidad and Tobago, where, 

according to the Fertilizer Institute, prices were about $1.60 per million 

BTUs in 2005. The U.S. fertilizer industry, which typically supplied 85 

percent of its domestic needs from U.S.-based production during the 

1990s, now relies on imports for nearly 45 percent of nitrogen supplies, 

according to a trade association representing fertilizer companies. 

 10GAO, Natural Gas: Domestic Nitrogen Fertilizer Production Depends on Natural Gas 

Availability and Prices, GAO-03-1148 (Washington, D.C.: Sept. 30, 2003). 

11GAO-03-1148. 

12Anhydrous ammonia is the source of nearly all nitrogen fertilizer produced in the world. 

Nitrogen fertilizer is composed of three basic components—nitrogen, potassium, and 

phosphorus—and of these components, nitrogen is the most important component of

fertilizer. Natural gas is a key component in the production of nitrogen, and the cost of 

natural gas can account for up to 90 percent of nitrogen fertilizer production costs. 

Page 18 GAO-06-420T 
Furthermore, other industries can be affected. In the fertilizer industry, 

according to a trade association representing fertilizer companies, costs 

are passed on to U.S. farmers, which have witnessed a dramatic increase 

in the cost of nitrogen fertilizers. The prices paid by farmers for the major 

fertilizer materials reached a record during the spring of 2005—on 

average, 8 percent higher compared with the same period in 2004, 

according to a trade association representing fertilizer companies. 

In today’s restructured market, the federal government does not control 

the price of natural gas or directly regulate most wholesale prices. 

However, three federal agencies—FERC, CFTC, and EIA—play key roles 

in overseeing and supporting a competitive and informed natural gas 

marketplace. 

The Federal 

Government Has a 

Limited, but 

Important, Role in 

Overseeing Natural 

Gas Markets 

FERC’s Oversight 

Activities

Under federal law, FERC is responsible for regulating the terms, 

conditions, and rates for interstate transportation by natural gas pipelines 

and public gas utilities to ensure that wholesale prices for natural gas, sold

and transported in interstate commerce, are “just and reasonable.” FERC’s 

jurisdiction over retail natural gas sales is limited to domestic gas sold by 

pipelines, local distribution companies, and their affiliates. The 

commission does not prescribe prices for these commodity sales. FERC’s 

regulatory authority applies to the physical markets for energy 

commodities, such as natural gas, and not to futures markets. 

In December 2002, we reported that as energy markets were restructured, 

FERC had not adequately revised its regulatory and oversight approach to 

respond to the transition to competitive energy markets. FERC agreed that 

its approach to ensuring just and reasonable prices needed to change: 

from one of reviewing individual companies’ rate requests and supporting 

cost data to one of proactively monitoring energy markets to ensure that 

they are working well to produce competitive prices. That year, the 

commission established the Office of Market Oversight and Investigations 

to actively monitor energy markets and, when necessary, undertake 

investigations into whether any entity had or was attempting to manipulate 

energy prices. As we previously reported, in 2002, FERC staff undertook 

several studies and investigations to determine whether there had been 

Page 19 GAO-06-420T 
attempts to manipulate upward prices for natural gas delivered to 

California during 2000-2001. 

FERC’s ability to monitor the natural gas markets has been enhanced in

several regards recently. First, the Energy Policy Act of 2005, passed last 

September, contains several enforcement provisions that increase the 

commission’s ability to punish wrongdoers that harm the public. In 

particular, the act provides FERC with the authority to impose greater 

civil penalties on firms that commit fraud. In addition, FERC has taken 

steps to strengthen its efforts to protect energy consumers. These actions

include establishing a telephone hotline that individuals can call to report 

market abuse or other problems. FERC also has begun actively monitoring 

natural gas markets to determine whether price movements are the result

of market manipulation or market fundamentals. The staff reviews market 

activity for any possible manipulation that might also affect prices and 

performs a detailed review of natural gas prices and market activity on a 

daily basis with the intent of identifying areas of possible manipulation. If

the staff identifies price anomalies that are not explained by market 

fundamentals, they investigate. 

Since 2002, FERC has settled a number of investigations involving natural

gas market manipulation. For example, 10 companies agreed to pay 

settlements totaling approximately $84 million. In addition, a FERC 

administrative law judge found that another company exercised market 

power over natural gas prices in California during the 2001-2002 heating 

season, and the company subsequently agreed to pay a settlement of $1.6

billion. FERC officials told us that, since early fall of last year, it has 

received complaints, expressions of concern, and requests to investigate

with respect to high natural gas prices through its enforcement hotline and

from public officials and the general public. Additionally, FERC has 

identified areas of concern through its daily market oversight process. 

FERC officials told us that all complaints and concerns are taken seriously 

and actively investigated, where appropriate. However, since ongoing 

investigations are considered nonpublic under FERC’s regulations, 

officials said they could not comment further on any ongoing 

investigations of the natural gas market. 

CFTC Oversight of Related 

Financial Markets 

A large part of CFTC’s mission is to protect market users and the public 

from fraud, manipulation, and abusive practices related to the sale of 

commodity futures and options, including natural gas. CFTC does this for 

federally regulated exchanges such as NYMEX, and it has limited authority 

over certain other futures markets. It does not have general regulatory 

Page 20 GAO-06-420T 
authority for other over-the-counter markets, including some used for 

trading natural gas futures or options.13 In fulfilling its regulatory role, 

CFTC conducts market surveillance to identify situations that could 

amount to attempted or actual futures market manipulation and to initiate 

appropriate preventive actions. For instance, to protect the futures market 

from excessive speculation that could cause unwarranted price 

fluctuations, CFTC or an exchange impose limits on the size of the 

transactions that may be held in futures or options of a commodity. In the 

natural gas futures market, these transaction limits are placed on trading 

that occurs during the spot month.14 To monitor these transaction limits, 

the commission has about 45 market surveillance staff and economists to 

do policy and economic analysis of energy trading issues. 

As part of its regulatory role, CFTC also enforces various laws prohibiting 

fraud, manipulation, and abusive trading practices. CFTC’s enforcement 

group investigates and prosecutes alleged violations of the Commodity 

Exchange Act. From 2002 through May 2005, CFTC investigated over 40

energy companies and individuals, filed over 20 actions, and collected over 

$300 million in penalties. Most of these actions were related to natural gas. 

For example, in July 2004, Coral Energy Resources, L.P. (Coral), a 

Houston-based firm that marketed gas to consumers across the United 

States, was ordered to pay a civil monetary penalty of $30 million. The 

penalty was imposed because the CFTC found that Coral knowingly 

provided false, misleading, or inaccurate information concerning its 

natural gas transactions from January 2000 to September 2002. During that 

time, CFTC found that Coral employees also attempted to manipulate the 

price of natural gas in interstate commerce or for future delivery. Natural 

gas traders report their market information to firms like Natural Gas 

Intelligence, who in turn compile pricing and volume indexes, for instance,

 13Under the Commodity Exchange Act, transactions in exempt commodities, which include

over-the-counter energy derivatives, are exempt from most provisions of the act, although

the antimanipulation and certain antifraud provisions are applicable and can be enforced 

by CFTC. To qualify for the exemption, the markets must be limited to institutional 

participants, and if a market should function like an electronic exchange, the exemption 

requires that the exchange limit transactions to participants trading for their own accounts,

notify the commission of their activities, keep records, submit to CFTC’s subpoena 

authority and information requests, and publicly report trade data when the products begin 

to serve a significant price discovery function. 

14The “spot month” is defined in many different ways, but generally refers to the nearest 

futures month beginning on a date near the first business day of the month in which the 

futures expires or on a date near the first day that delivery notices can be tendered. Some

spot-month limits apply to both hedge and speculative positions. 

Page 21 GAO-06-420T 
that are used by market participants to settle their transactions. 

Submitting incorrect information could affect the price of natural gas in 

interstate commerce and could affect the futures or options prices of gas.

FERC and CFTC have recently signed a memorandum of understanding to

create a more effective and efficient working relationship between the two 

agencies. The agreement covers the sharing of information and the 

confidential treatment of proprietary energy-trading data. FERC officials 

told us that if either agency needs information about trading within the 

other agency’s jurisdiction, then the other agency must provide it. The 

understanding is to contribute to better coordination of enforcement 

cases. 

The Energy Information Administration (EIA) is charged with collecting 

information about energy markets, including natural gas. The information 

reported by this agency is important in promoting efficient natural gas 

markets and public awareness of these markets. In our 2002 analysis of 

natural gas markets, we identified that most elements of EIA’s natural gas 

data collection program inadequately reflected some of the changes in the

market. For example, with some exceptions, EIA’s current natural gas data

collection program remains primarily an annual effort to obtain 

comprehensive information on natural gas volumes and prices, while 

markets have evolved to require more timely and detailed data. However, 

beginning in the spring of 2002, EIA began to provide more real time 

market information that traders and other gas industry analysts use as an 

indicator of both supply and demand. For example, on May 9, 2002, EIA 

began releasing weekly estimates of natural gas in underground storage 

for the United States and three regions of the United States. According to 

EIA, these data are valued by market participants and are a key predictor 

of future natural gas price movements. EIA has also undertaken efforts to 

better understand derivatives markets and the effectiveness of energy 

derivatives to manage price risk. In addition, EIA’s weekly natural gas data

releases are published each Thursday, and according to EIA officials, 

these releases have been well received by natural gas market participants.

Natural gas has become an essential element in our national energy 

picture. Ironically, however, natural gas markets may be suffering from the 

growing popularity of this versatile fuel. Rising demand and tightening 

supply appear to have contributed to both the general rise in prices over 

the past several years as well as the price spikes, such as that following 

FERC and CFTC Taking 

Action to Better 

Coordinate Oversight 

Efforts 

EIA Collects, 

Disseminates, and 

Analyzes Information 

about the Market 

Concluding 

Observations 

Page 22 GAO-06-420T 
the hurricanes in 2005. Moreover, the stage seems set for future price 

spikes if either demand is higher than expected or supplies are 

unexpectedly interrupted. 

To the extent that the higher prices persist and price spikes are possible, 

natural gas markets could pose significant challenges for our country. 

Many people may have to pay a larger percentage of their income for home 

heating and other uses of natural gas, such as electricity—not just this 

year, but every year. Some may not be able to afford it. Further, because

some key industries have historically relied on low natural gas prices to be 

competitive, we may lose some of these industries along with the jobs that 

they provide. 

These are weighty issues that require concerted actions reaching across 

not just the natural gas industry but also across the energy sector and 

related financial markets. The American consumer wants secure, 

affordable, reliable, and environmentally sound energy. Meeting this 

demand will be a challenge. This hearing offers another important step in 

the process of overseeing the regulators—FERC and CFTC—charged with

ensuring these markets operate as intended. 

Mr. Chairman, this concludes my prepared statement. I would be pleased

to respond to any questions that you or other Members of the 

Subcommittee may have at this time. 

If you have any questions about this testimony, please contact me at (202)

512-3841 or wellsj@gao.gov. Other major contributors to this testimony 

include Karla Springer (Assistant Director), Lee Carroll, Michael Derr, 

Patrick Dynes, Elizabeth Erdmann, Philip Farah, John Forrester, Mark 

Gaffigan, Mike Hix, Chester Joy, Jon Ludwigson, Kristen Sullivan Massey, 

Cynthia Norris, Frank Rusco, Jena Sinkfield, Rebecca Spithill, John 

Wanska, and Kim Wheeler-Raheb. 

Contact and Staff 

Acknowledgments 

Page 23 GAO-06-420T 
Page 24 GAO-06-420T 

Related GAO Products 

Meeting Energy Demand in the 21st Century: Many Challenges and Key

Questions. GAO-05-414T. Washington, D.C.: March 16, 2005.

Natural Gas: Domestic Nitrogen Fertilizer Production Depends on 

Natural Gas Availability and Prices. GAO-03-1148. Washington, D.C.: 

September 30, 2003. 

Energy Markets: Additional Actions Would Help Ensure That FERC’s 

Oversight and Enforcement Capability Is Comprehensive and 

Systematic. GAO-03-845. Washington, D.C.: August 15, 2003. 

Natural Gas: Analysis of Changes in Market Price. GAO-03-46. 

Washington, D.C.: December 18, 2002. 

Energy Markets: Concerted Actions Needed by FERC to Confront 

Challenges That Impede Effective Oversight. GAO-02-656. Washington,

D.C.: June 14, 2002. 

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