Effective March 1, 2010 through June 30, 2012 sales and purchases of electricity, coal, gas, fuel oil, steam, coke, or nuclear fuel used in processing, manufacturing, mining, refining, irrigation, construction, telegraph, telephone, and radio communication, street transportation services, and all industrial uses are not exempt from the 2.9 percent state sales and use tax.

These changes apply ONLY to Colorado state sales and use tax, not to any city, county or special district taxes. Please click this link to see the complete document.
http://www.colorado.gov/cs/Satellite/Revenue/REVX/1251571250720

STORAGE REPORT
This week’s EIA storage report for the week ending April 9, 2010:
This week’s injection of: 87 Bcf
Leaving this week’s balance at: 1756 Bcf
This week’s balance last year: 1692 Bcf
This week’s balance, 5-yr average: 1510 Bcf

The build was slightly above expectations. This marks the fifth consecutive week of inventory data that has been bearish when compared to the five year average.

THOUGHTS ON THE MARKET

The drilling rig count increased to 1,491 adding 15 more rigs last week, as some projects must be drilled just to maintain leasehold ownership rights.

If budget certainty is important to you purchase gas for up to the next 12 months anytime the prompt month trades below $4.00. History favors a price increase during quarter two. Twenty years ago this month, the NYMEX began trading natural gas. Today, it is the benchmark for gas pricing and the 2nd highest volume futures contract on the exchange, averaging 226,000 contracts per day.

STORAGE REPORT
This week’s EIA storage report for the week ending February 5, 2010:
This week’s withdrawal of: 191 Bcf
Leaving this week’s balance at: 2215 Bcf
This week’s balance last year: 2043 Bcf
This week’s balance, 5-yr average: 2101 Bcf

Natural gas inventories are 8.4% above this time last year and 5.4% above the five year average.

THOUGHTS ON THE MARKET

Natural gas remains range bound but the tendency for this time of year is toward lower prices once March arrives. The past decade, the average total winter withdrawals from storage have been 1.996 Tcf, while the average total summer withdrawals have been 2.069 Tcf. The highest winter withdrawal has been 2.530 in 02-03. So far this winter, we have withdrawn 1.622 Tcf.

If we continue to withdraw storage this winter at the current pace, we will exit the withdrawal season with a comfortable 1.289 Tcf in the ground. Last spring, we began the injection season with 1.651 Tcf (3rd highest) in storage. The implication is that we will not surpass last summer’s record high storage level but we will have plenty of gas available and gas prices will not be quite as low as 2009 on average.

Market sources say the current supply glut and the opening last year of two major interstate pipelines have combined to keep a lid on price volatility this winter despite periods of much-below-average temperatures. The Rockies Express Pipeline has helped bring more diversified supply to premium market areas. Of the past four winters, price volatility has been lowest this year.

With the current 2011 gas strip trading around its lowest level since Jan ’09 ($6.15/MMBtu) drilling should continue to be incentivized, which is likely to increase domestic gas production further. Oil ended last week higher amid a decline in the dollar, cold weather boosting demand in the Northeastern U.S., and higher demand forecasts from the International Energy Agency.

STORAGE REPORT
This week’s EIA storage report for the week ending January 8, 2010:
This week’s withdrawal of: 266 Bcf
Leaving this week’s balance at: 2852 Bcf
This week’s balance last year: 2749 Bcf
This week’s balance, 5-yr average: 2731 Bcf

Natural gas inventories are now 4.4% above the five year average.

THOUGHTS ON THE MARKET

Gas prices remained basically flat this past week in spite of a storage withdrawal of 266 Bcf that was just short of the all-time record of 274 from the week ending Jan 25, 2008. With the return of normal temperature supplies remain plentiful. Analysts predict another large withdrawal in this upcoming week’s report, with prices to keep falling in the near term.

Natural gas consumption is expected to remain at about the same level in 2010 while we should see a small increase in 2011. Crude oil prices fell for the sixth day this is the longest decline in a month.

STORAGE REPORT
This week’s EIA storage report for the week ending November 27, 2009:
This week’s injection of: 2 Bcf
Leaving this week’s balance at: 3837 Bcf
This week’s balance last year: 3367 Bcf
This week’s balance, 5-yr average: 3350 Bcf

This week’s fill marks the fourth consecutive week of injections for the month of November, the first time a net injection occurred for each week in November since 2001.

THOUGHTS ON THE MARKET

Next year is likely to bring a near-repeat of 2009 gas pricing trends as the US balances a moderate decline in production with a continued abundance of storage gas and higher imports of LNG. Several analysts have lowered their gas price expectations for the next few months as few see any real chance of eliminating the gas glut anytime soon. Storage is holding comfortably above 3.8 Tcf.

ROCKY MOUNTAIN ENERGY CONFERENCE

Please join me on Oct 23rd at Invesco Field at Mile High at 9:00 a.m. to attend the Rocky Mountain Consumer Energy Conference. The information presented at this conference will help you budget for rising energy costs. Click www.rmcec.org to receive additional information about the conference and register to attend.

STORAGE REPORT
This week’s EIA storage report for the week ending September 25, 2009:
This week’s injection of: 64 Bcf
Leaving this week’s balance at: 3589 Bcf
This week’s balance last year: 3098 Bcf
This week’s balance, 5-yr average: 3108 Bcf

Natural gas storage is 15.5 percent above the 5-year average level. Natural gas storage inventories reached record-high of 3.589 Tcf with five weeks remaining in the traditional refill season. Many analysts now expect storage levels at the end of October to top 3.9 Tcf.

THOUGHTS ON THE MARKET

Regardless of natural gas storage levels, we are in the 4th quarter and gas prices rally. So far the percentage increase from the single day low price of $2.409 on Sept 4th to the November contract single day high of $4.975 is 107%. History shows that hedging forward gas during the 4th quarter results in overpaying for budget insurance. You may want to wait to make any more forward purchases until prices decline to the 1st quarter low.

For all of its merit, natural gas vehicles don’t appear to be big future gas consumers, as hybrids take off in their stead. It will be gas fired power generation, with a carbon footprint as much as 60% lower than coal plants that will be the future’s big gas consumer.

STORAGE REPORT
This week’s EIA storage report for the week ending September 4, 2009:
This week’s injection of: 69 Bcf
Leaving this week’s balance at: 3392 Bcf
This week’s balance last year: 2897 Bcf
This week’s balance, 5-yr average: 2889 Bcf

Natural gas storage is 17.4 percent above the 5-year average and 17.1 percent above last year’s level.

THOUGHTS ON THE MARKET

The Sept NYMEX closed at the lowest prompt-month expiry in 7 ½ years. Natural gas made an expected rally last week as many consumers and speculators bought in response to the lowest prompt month price. The Dow also closed the week at 9605, the exact level it was at the close of 9/11/2001. Natural gas wasn’t far from its price 8 years ago of $2.40, which was our low last week. After the 9/11 tragedy, prompt gas dropped to $1.76 and the calendar ’02 strip price was $2.90. When we made the low of $2.40 last week, the calendar ’10 strip was $5.25. Historically, multi-year lows are followed in 6 months with a retest of that low and during the retest the forward strip prices are lower than at the time of the initial low. We may be at a multi-year low. Expect gas prices to make a seasonal run up beginning in October. Reasons will range from the seasonal nuclear plant outages to tropical storms, but with storage already at 3.4 Tcf, the Q4 will be muted and early Q1 may be your best bet to buy longer term gas at lower premiums as we end the winter season with record levels of gas still in storage.

Here is another analyst version of what will happen in the upcoming months. EIA expects that the Henry Hub price of natural gas will average $2.25/MMBtu in Oct. Prices are projected to bottom out in Oct and then rise through Feb 2010 averaging $4.59/MMBtu in Feb, and fall from Mar through Aug 2010.