Record Snowfall To Bring Lower Natural Gas Prices

Friday, April 15, 2011

The 400-mile stretch of the Sierra Nevada mountains got 61 feet of snow last winter, second only to the 1950-51 season. In Squaw Valley, 59 feet fell, beating the old record by 29 inches. Good for skiers. Good too for anyone who uses electricity, especially in the west.

Indeed, the western U.S. got so much snowfall last winter that as the snowpack melts and runs into the west’s rivers the result will be a year of record hydropower generation. Bentek, the natural gas analysis group, figures that hydro generation will be 35% higher than usual this year, averaging 166 gigawatt-hours per day from January through August.

Bentek explained in a report this week that the abundance of hydropower, especially in the Columbia River Basin, will lead to historically rare negative power prices (where the generating companies actually pay consumers to take the power) as well as a marked reduction in demand for natural gas.

Between January and August, figures Bentek, the gas offset will be roughly 300 billion cubic feet. That’s not a huge amount in the scheme of things — the U.S. uses about 27 trillion cubic feet a year. But it’s not a small amount either, amounting to 7% of U.S. natural gas storage capacity.

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