Commentary by Eric Wilder – Estimates released today by the EIA suggest we are on track to begin 2006 with the lowest volume of natural gas in storage ever.  The problem is three-fold. 1) One third of the nation’s production of natural gas comes from the Gulf of Mexico and much of the infrastructure destroyed by the worst hurricane season on record is still not repaired and back on line.  2) U.S. Production of natural gas is declining.  3) U.S. demand for natural gas is increasing.

On a positive note, the present high price of natural gas is spurring exploration.  Present drilling activity is limited only by lack of equipment and warm bodies.  This will likely change for the good as long as prices remain near record levels.

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