The country is awash in natural gas inventories, and mild temperatures have kept demand in check. But the price of this home-heating and power-generation fuel is still soaring above historical norms.

Before 2000, natural gas futures rarely climbed above $3.

front-month natural gas futures traded close to $9 per 1,000 cubic feet late last month

They are now trading near $7

What gives?

A dearth of natural gas storage and pipeline capacity, particularly in the Northeast, raises the risk of bottlenecks during periods of peak demand, and that places abnormally high seasonal pressure on prices -- even when nationwide supplies are bountiful

Natural gas is used to heat roughly 62 million homes in the United States

If natural gas prices do not become more stable, the industry could very well lose market share to coal and nuclear power

as a result of rising demand and insufficient investment in the equipment needed to transport natural gas from producing areas to consuming areas, "we're busting at the seams."

the country's natural gas "plumbing" is under stress partly because longtime supply-and-demand trends are shifting. Production is declining along the Gulf Coast, while rising in segments of the Southwest and the Rockies

At the same time, industrial consumption in the Midwest is down, while Northeast and Southeast power plants are demanding ever more fuel.

At the start of last month, the unofficial start of the winter heating season, inventories of natural gas in underground storage facilities stood at 3.45 trillion cubic feet -- the highest level ever recorded by the government.

"I don't think there'll be any problem with capacity unless some [winter] storm of the century hits, or something like that,"

In another sign of reduced bottlenecking to come, a consortium led by ConocoPhillips, Kinder Morgan Energy Partners LP and Sempra Pipelines & Storage plans to build the Rockies Express pipeline -- a 1,663-mile project, costing $4 billion, to carry natural gas from northern Colorado to eastern Ohio by 2009

   Full article at washingtontimes.com

Congress has been focused in recent years on proposals to open up more public lands for natural gas drilling. But analysts said these initiatives alone will not help to lower prices or reduce price volatility if the country's capacity to store and transport this fuel is not significantly increased as well