Natural gas data to be revised

Alisa Roth Apr 5, 2010

Natural gas data to be revised

Alisa Roth Apr 5, 2010


Kai Ryssdal: The Energy Department comes out with a report every month saying how much natural gas we produce, how much we have in stockpiles, how much we’re using, all that stuff. It does the same thing for oil, too.

They’re used for all a whole bunch of different things: making capital investments, predicting future prices; basically, letting exploration companies figure out if it makes sense to keep on drilling. Pretty handy tool to have, actually.

Until it’s not. The Energy Department said today it’s going to change the way it puts that natural gas report together because it’s been over-estimating our supplies.

Marketplace’s Alisa Roth explains.

ALISA ROTH: Every month, the government takes a survey of natural gas companies and uses that data to guess how much we’re producing.

Chris Jarvis is an energy consultant. He says he’s long suspected the reports weren’t all that accurate.

CHRIS JARVIS: To be quite frank, every time the data was released, you kind of had to take it with a grain of salt.

He says over the last couple of years, improved drilling techniques have opened up new regions — a lot of gas is now coming from small drillers in places like North Texas instead of from big ones in the Gulf of Mexico.

JARVIS: There’s a lot of smaller players in the market. It’s not your typical off-shore, you know, big player drillers.

By only talking to those big off-shore players, the government’s not getting the full picture anymore. So it’s been telling us we’re producing a lot more than we actually are.

One analyst said the government data was off by more than 10 percent. Producers say that’s made for artificially low prices.

Jarvis says prices may go up initially after the government releases the revised report. But longer term, he thinks the new reporting will make for a less volatile market.

Gus Faucher is an economist with Moody’s He says depending how you use natural gas, this could be important to you.

GUS FAUCHER: In general the pass through from prices at the well goes through pretty quickly to consumers for things like heating. In terms of electricity, the pass through tends to be more delayed.

The government will issue the revised January and February reports at the end of April. At the end of the year, it plans to put out reports that recalculate production for all of last year.

In New York, I’m Alisa Roth for Marketplace.

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