Warmer weather could mean cooler sales for natural gas co's

NOAA Winter Forecast

NOAA Winter Forecast

Sales of natural gas rely heavily on weather conditions.  The colder it is in the winter, the more natural gas you sell.  Looking ahead to Winter 2008-2009, several authorities are predicting a mild winter that could impact sales at Northwestern Corporation and other natural gas companies.

The prediction of the National Oceanic and Atmospheric Administration is for warmer than average temperatures in the central U.S., with the coasts in average territory.

A counterpoint:  the Department of Energy notes that natural gas in the current inventories was purchased earlier in the year at higher prices.   Those costs will be passed on to the consumer in the form of higher prices this winter.

Meanwhile, industry group “Natural Gas Supply Association” is predicting a decline in “heating degree days”–a measure of the difference in outdoor temperature and 65 degrees Fahrenheit over the course of the season.  Last year it was 3,572 heating degree days (HDD); this year they expect to see a drop to 3,534 HDD.  Of course, they point out, Accuweather.com predicts a colder winter than average, unlike NOAA.

The final authority?  Look out, natural gas providers–the Farmer’s Almanac is backing up NOAA on that warm central U.S. prediction: “Winter temperatures will be two degrees above normal, on average, with below-normal precipitation and snowfall.”

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