Just downstream from the Appalachian supply basin — where daily spot natural gas prices are among the lowest in the country — cash and forward prices in the Mid-Atlantic and Southeast have rocketed, becoming the highest gas prices in the land, and in some cases are at never-before-seen levels for this time of year. No doubt it’s been a sweltering summer so far, and low storage levels aren’t helping either. But there’s more to the price premiums than that. Limited access to supply and constraints on Williams’ Transco Pipeline — the primary system delivering gas to the region — have created a demand “island” there just as persistent heatwaves boosted cooling demand. Moreover, without additional pipeline capacity, the dynamics unfolding this summer could become a regular feature of the Southeast/Mid-Atlantic markets. In today’s RBN blog, we break down the factors driving regional prices to new heights.
We’ll start our analysis with what caught our attention in recent weeks: the eye-popping pricing anomalies that emerged in the Mid-Atlantic and Southeast regions starting around mid-June. Daily spot price history from our good friends at NGI shows that the national benchmark Henry Hub (black line in Figure 1) ran up to nearly $10/MMBtu in early June but lost steam in the second half of the month and ended June with a $6 handle. However, Mid-Atlantic and Southeast prices, represented by trading hubs along the Transco corridor, began to diverge from Henry Hub around that time.
Transco Zone 5 cash (brown line in Figure 1), which represents the Carolinas, Virginia and Maryland markets, had been averaging just 17 cents above Henry in the April-May timeframe and 44 cents above Henry Hub in the first 13 days of June. But prices there abruptly jumped to an all-time high for the June-July timeframe at $16.43/MMBtu on June 14, more than $7 above Henry Hub that day. For the rest of June, it averaged nearly $9.60/MMBtu, more than $2.50 above Henry Hub, and in July, Transco Zone 5 cash topped $11/MMBtu, more than $4 above Henry. Transco Zone 3 (Louisiana; green line) and Zone 4 (Mississippi, Alabama and Georgia; sky blue line) June-July average prices, which had traded a few cents back of Henry in previous years, surged to premiums of $1.60-$1.75 to Henry.
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About the song
"Flyin' High" was written by Billy Gibbons, Austin Hanks, and Dave Sardy. It appears as the seventh song on ZZ Top's 15th studio album, La Futura. "Flyin' High" got its world premiere from outer space when astronaut Mike Fossum, a longtime friend of ZZ Top, played the song from on board the Soyuz spacecraft en route to the International Space Station in June 2011. Personnel on the record were: Billy Gibbons (lead vocals, guitar), Dusty Hill (bass, backing vocals) and Frank Beard (drums, backing vocals).
La Futura was recorded between June 2011 and June 2012 at Foam Box Recordings in Houston, TX, with production by Rick Rubin and Billy Gibbons. Futura is the name for a 1955 Lincoln concept car that George Barris purchased and turned into the original Batmobile. Seeing that Billy Gibbons is a hot rod and custom car enthusiast, it's not a far stretch to imagine where the album title came from. Released in September 2012, the album went to #6 on the Billboard Top 200 Albums chart. It was the band's first album in nine years, following Mescalero, released in 2003. Regarding Rick Rubin's role in co-producing the album, Gibbons said: "He pushes us to spend time reaching down deeper." It was the last ZZ Top studio album to feature Dusty Hill, who passed away in July 2021.
ZZ Top is an American blues-rock band formed in Houston in 1969 by Billy Gibbons, Dusty Hill and Frank Beard. Gibbons had previously been in the band, Moving Sidewalks, and Hill and Beard came from the band, American Blues. ZZ Top has released 15 studio albums, five live albums, seven compilation albums and 44 singles. They have sold over 50 million records worldwide. They have won several MTV Video Music Awards and were inducted into the Rock and Roll Hall of Fame in 2004. The band continues to record and tour, recently releasing Raw, the live album soundtrack to the ZZ Top documentary, That Little Ol' Band from Texas. After Dusty Hill's death, per his request, longtime ZZ Top guitar tech Elwood Francis has taken over the bass chores for the band. They are currently on tour in the U.S. through the end of the year.
