The Nymex gas futures price chart is shown here to provide perspective on recent gas prices relative to their previous patterns both at cyclical highs and at prior stable market environments.
First month gas futures have averaged only slightly more than $4/mmbtu over the last twelve months. While this is double the relatively sustained price plateau that was experienced prior to late 2000 it is still well below the price assumptions that appear to be underlying most companies' expectations for the future and the current long-term Nymex prices after 2012.
For reasons discussed in this issue of On Point we believe that there is considerable risk that the most recent gas price plateau at and around $4/mmbtu may not be sustainable. Slippage down even lower to some point between recent averages and the levels experienced from 1994 through 1999 is a risk with some significant probability.