Gas Prices Texas MCF

• This edition of the Short Term Energy Manual includes forecasts through 2008.

• Warm December weather led to a decline in crude oil and natural gas prices. Between December 1 and the end of the month, the West Texas Intermediate (WTI) spot price fell from $63.48 per barrel to $60.85, and the Henry Hub natural gas spot price dropped from $8.67 per thousand cubic feet (mcf) to $5.67. For a review of notable events that occurred in petroleum markets in 2006, see The governments report on petroleum .

• Projections of U.S. heating fuel expenditures for the 2006-07 winter season have declined from last month’s manual report reflecting warm weather. Average household heating fuel expenditures are projected to be $873 this winter compared to $948 last winter. This would be the first winter since the winter of 2001-02 in which home heating fuel expenditures are expected to decline from the prior winter.

• In 2007 and 2008, total U.S. energy demand is expected to increase at annual rates of about 1.2 and 1.7 percent, respectively.

• The price forecasts over the next few months have been lowered from last month’s forecast, but projections beyond this winter are relatively unchanged. The price of WTI crude oil, which averaged $66.02 per barrel in 2006, is projected to average $64.42 per barrel in 2007 and $64.58 per barrel in 2008 (West Texas Intermediate Crude Oil Price). Henry Hub natural gas prices, which averaged $6.94 per mcf in 2006, are projected to average $7.06 in 2007 and $7.72 in 2008.