Our local distribution companies have contracted for adequate supplies of gas to meet winter heating needs of residential customers. Customers on interruptible service, however, can expect to experience interruptions this year due to tight gas supplies. We have resources for over 50 years and readily available reserves of at least 10 years. The problem is the lag between the growth in demand and ability to increase production can last from 18-24 months. Consequently it is likely to be some time before this new gas gets to market to soften the current price volatility.
High prices provide incentives to producers to produce new gas.
While drillers' exploration budgets have contracted in recent years due to the low prices in the national market, preliminary information demonstrates that they are increasing those budgets currently and prospectively. We have already seen an increase in drill rig activity over the last six months. Currently, the price you pay your utility may go down slightly if the rest of the winter reverts to milder weather, even normal weather. If the weather becomes colder again, high prices may remain for a while. In any event, a return to prices of a year ago is highly unlikely for some time unless the weather really turns much warmer and the economy slows even further.