Mercury down, fuel prices up

As icy weather sweeps across US Northeast, demand for fuel to heat homes shoots up.

NATURAL gas surged to 60 times the going rate as howling blizzard conditions stoked demand for the furnace fuel across the US Northeast.

Spot prices for the fuel used to heat homes and generate power reached a record US$175 (RM699) per million British thermal units in New York, according to Consolidated Edison Inc.

That’s a far cry from the US$2.93 (RM11.70) that US gas futures have been averaging on the New York Mercantile Exchange this winter.

Other major trading hubs in New York and New England saw prices exceed US$100 (RM400), according to a person familiar with those markets.

Even if the rally cools later as the storm lambasting New York and Boston moves off to the north, prices in the region probably will close in the triple digits, the person said.

“This string of cold has stressed the market just as much as the polar vortex” of 2014, said John Borruso, director of natural gas trading at ConEdison in Valhalla, New York.

“You are seeing pipeline restrictions and flow restrictions pop up.”

The cold-weather cyclone swirling off Nantucket island grounded thousands of flights, disrupted rail service, shut schools and prompted emergency declarations up and down the Eastern Seaboard.

Even as slashing winds cut off power to more than 70,000 homes and businesses, electricity prices climbed 126% to US$273.23 (RM1,092) a megawatt-hour on Thursday morning, the highest for that time of day in almost four years.

The gas squeeze underscores the lack of adequate pipeline capacity to haul enough gas from Appalachia and points farther afield to Northeast metropolises where households have been scrapping heating-oil tanks for gasfired furnaces.

As a result, gas in the region is the world’s priciest, commanding 14 times more than UK futures price and about nine times more than Asian imports of the liquefied version of the fuel.

The market mayhem in and around New York is having a knock-on effect even in regions far away from stormy weather.

At an Appalachian pipeline hub known as Dominion South that is typically home to the cheapest American gas, the price jumped to US$4.15 (RM16.60), almost twice the 12-month average and a huge premium to late October, when it fetched just 29 cent, according to Borruso and Intercontinental Exchange data.

“With demand and price for gas being this high in New York and New England, everybody wants to flow gas into the region but the current pipeline infrastructure cannot carry enough to even the market out,” said Armagan Yavuz, the Boston-based regional director for Genscape Inc., which tracks real-time power and gas data.

Another Bloomberg report says that the storm has whipped the US Northeast with blinding snow, churning up high winds and pulling frigid air down from the Arctic.

After the fast-moving weather system pushes off toward Nova Scotia, freezing temperatures building up across Canada will rush into the central and eastern parts of the US, said David Hamrick of the US Weather Prediction Centre in College Park, Maryland. “It will be noteworthy,” he said. “We will see records.”

The storm’s power has been increasing in a process called bombogenesis – known to some as a bomb cyclone – which occurs when a system’s air pressure drops 24 millibars in 24 hours.

In fact, the pressure plummeted by 21 millibars in just six hours overnight, said Bob Oravec, a senior branch forecaster at the Weather Prediction Centre.

“It is really going to town.”

As the system moved out over the Atlantic Ocean, streets in towns there were flooded, with Gloucester, Sandwich and Scituate among the hardest hit, according to the National Weather Service.

In Gloucester, a historic fishing village north of Boston, water from the Atlantic poured onto city streets, swamping cars up to their windows and trapping residents in homes.

With severe wind gusts, Manhattan and Boston could feel as cold as minus-10 to minus-15.

“This is going to be some brutal air coming,” said Alan Dunham, a weather service meteorologist in Taunton, Massachusetts.

The storm grounded more than 3,600 flights around the US, according to the tracking service FlightAware. Almost all flights were cancelled at New York’s LaGuardia airport, and traffic at John F. Kennedy airport was temporarily suspended.

Schools were closed from Philadelphia to Boston.

New Jersey declared emergencies in Cape May, Atlantic, Ocean and Monmouth counties and New York in New York City, Westchester County and on Long Island, where high winds brought on near whiteout conditions.

Traffic was uncharacteristically light on the wind-tossed streets of Manhattan, and subways emptier than normal. The few people braving the outdoors were bundled up, just bits of their faces exposed.

There were reports of 20cm of snow across the city, Hamrick said.

“Basically, this storm is overper- forming,” Hamrick said.

Boston’s Downtown Crossing, a pedestrian shopping zone, was a ghost town.

The Massachusetts Retailers Association predicted stores would lose out on about US$20mil (RM80mil) in revenue Thursday and Friday.

Amazon.com Inc. closed several of its East Coast delivery hubs and said customers could expect shipment delays.

Winter-storm warnings covered parts of 12 eastern states while blizzard warnings blanket the US coast from Virginia to Maine, including New Jersey, Long Island and Boston.

On Wednesday, the storm had dumped snow as far south as Florida. In Brunswick, Georgia, large chunks of ice fell on commuters’ cars Thursday from the old oak trees that frame the streets.

One bright spot might be the storm’s speed, said Rob Carolan, a meteorologist at Hometown Forecast Services Inc. in Nashua, New Hampshire.

Unlike past historic blizzards that caused billions in damage from flooding and snowfall, this one may not stick around long enough.

“It is moving very, very quickly,” he said.

“It is in and out, which is good news.”