The U.S. natural gas market is one of the most transparent, liquid and efficient commodity markets in the world. Physical trading is anchored by hundreds of thousands of miles of gathering, transmission and distribution pipelines, and well over 100 distinct trading locations across North America. The dynamic physical market is matched by the equally vigorous CME/NYMEX Henry Hub natural gas futures market. Then, there are the forward basis markets — futures contracts for regional physical gas hubs. These primary pricing mechanisms play related but distinct roles in the U.S. gas market, based on when and how they are traded, their respective settlement or delivery periods, and how they are used by market participants. In today’s RBN blog, we take a closer look at the primary pricing mechanisms driving the U.S. gas market.
NATGAS Billboard is a daily, early morning email and report that provides an up-to-the-minute view of the natural gas market outlook, including storage injections/withdrawals and price. Billboard’s models incorporate pipeline flow data, weather models, electricity demand data and more.
In Part 1, we began with a trip in the way-back machine to see how these pricing systems — including the processes for price discovery and transparency — even came to be in the U.S. gas market in the first place. We recounted the shift of physical gas trading from a primitive market with long-term deals done only between producers and pipeline owners at regulated prices to a burgeoning spot market with no price controls and “open access” on pipelines for others besides pipeline owners to use transportation capacity to ship gas. That era of decontrol and restructuring of the pipeline industry was followed by a period of minimal regulatory oversight in which independent publishers — price reporting agencies (PRAs) — took on the role of carrying out price discovery and dissemination. That worked until it didn’t. The Enron debacle in the early 2000s forced a hard look at manipulation issues that influenced published price indices and brought the Federal Energy Regulatory Commission (FERC) back into the picture.
FERC put in place strict price-reporting and ethical guidelines for those companies that choose to report trades to PRAs. And, starting in 2009, market participants who buy or sell an annual minimum of 2.2 trillion British thermal units (TBtu) in the physical day-ahead or month-ahead market — i.e., the kind of transactions that either impact or are impacted by PRA indices — also were required to submit Form 552 each year, reporting all purchases and sales of gas by quantity and type of pricing mechanism. That resulted in the robust Form 552 dataset, including volumes for fixed-price deals (negotiated prices between counterparties) and index-price deals (transactions based on a PRA-published index) for next-day and next-month delivery.
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About the song
“Something in the Way She Moves” was written by James Taylor and appears as the sixth song on side one of James Taylor’s debut studio album, James Taylor. The song was covered by Tom Rush, who released a single of it in April 1968, where it garnered airplay for Rush in the New England area. The song has been covered by other artists such as Bobbie Gentry, Harry Belafonte, and Ian Matthews. “Something in the Way She Moves” was played by Taylor for George Harrison and Paul McCartney at his audition for Apple Records. Harrison liked the title so much that he used it as the opening line to his song, “Something,” that appeared on The Beatles’ Abbey Road album and reached #1 on the charts when released as a single in 1969. Personnel on the record were: James Taylor (lead, backing vocals, acoustic guitars) and an uncredited musician (steel guitar).
James Taylor was the first album by a non-British act released on The Beatles’ record label, Apple Records. It would be Taylor’s only release with that label. It was recorded between July-October 1968 at Trident Studios in London, in the room where The Beatles were working on what would be referred to as the “White Album.” It was produced by Peter Asher, who was one half of the British pop duo Peter and Gordon, and the head of A&R at Apple Records. Released in the U.S. in February 1969, the LP received good reviews, but failed to enter the Billboard Top 200 Albums chart.
James Taylor is an American singer, songwriter, musician, and actor. He has sold more than 100 million records worldwide. He has released 20 studio albums, four live albums, seven compilation albums, one EP, and 40 singles. He has won seven Grammy Awards and is a member of the Rock and Roll Hall of Fame and the Songwriters Hall of Fame. He is a recipient of a George and Irma Gershwin Award, the Presidential Medal of Freedom, and a Kennedy Center Honor. Taylor played the lead role in Monte Hellman’s 1971 hit cult film about street racing, Two-Lane Blacktop. He still records and tours and will begin his James Taylor and his All-Star Band Tour in April 2022.
