- The Washington Times - Monday, July 31, 2006


Natural gas futures surged 14 percent to a near six-month high yesterday, rallying on strong demand from power producers amid scorching temperatures across the Midwest and Northeast.

Oil prices also rose as fighting between Israel and Hezbollah raged on, keeping traders tense about a potential Mideast supply disruption.

The U.S. heat wave drove up demand for natural-gas-fired electricity as consumers cranked up their air conditioners and many utilities asked homeowners to conserve electricity, including PJM Interconnection, the electric grid operator for 13 states and the District of Columbia.

September natural gas futures jumped $1.027 on the New York Mercantile Exchange, settling at $8.21 per 1,000 cubic feet — the highest close for front-month natural gas futures since Feb. 3.

The upper Midwest and Plains were steamy, with heat warnings issued from Michigan to Oklahoma.

Forecasts for above-normal highs were posted along the East Coast, where triple-digit readings were forecast for today from the Carolinas through southern New England.

Jim Owen, a spokesman for the Edison Electric Institute, a Washington trade group, said there was a “fairly significant strain” on the nation’s power grid.

Particularly vulnerable are the distribution lines, which heat up and sag as more juice flows through them, raising the risk of outages.

Although there were some unplanned nuclear power-plant outages in Michigan and Minnesota because of the heat, Mr. Owen said power generators and distributors appear to have enough capacity to meet demand.

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