Dallas Fed survey suggests gas prices will decline

The Federal Reserve Bank of Dallas said September 29 that results from a survey of industry representatives show the price for Henry Hub is expected to soften somewhat during the fourth quarter.

Executives from 137 oil and gas companies responded to survey questions issued by the Fed during the September 15 to September 23 period. The price for natural gas at Henry Hub, the benchmark for prices on the New York Mercantile Exchange, during the survey period averaged $5.22/mn Btu.

The average forecast for survey respondents was for $4.74/mn Btu during the fourth quarter. While lower than current levels, the prediction is $1.64/mn Btu higher than what survey results suggested for a third quarter average.

Soaring natural gas prices are a growing source of contention as the Northern Hemisphere braces for colder weather. US senator Joe Manchin, a Democrat representing West Virginia, said during an oversight hearing this week that he was fretting over the 25% increase in consumer energy prices over the last 12 months.

“I’m concerned we are on a runaway rise,” he said.

In a special questions section, most survey respondents expressed optimism about the steady increase in prices for natural gas, crude oil and other commodities. More often than not, their biggest complaint was the lack of qualified workers.

Henry Hub was trading near $5.50/mn Btu on September 29. The high price of natural gas is prompting some energy producers to turn to cheaper coal.