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December 25th, 2013:

Natural Gas Price Spikes Put Squeeze on Paper Producer

American Energy Coalition - December 25th, 2013

Extremely high natural gas prices have forced a New Hampshire company to temporarily halt operations and furlough employees, according to an article in the New Hampshire Union Leader.

Gorham Paper and Tissue, of Gorham, N.H., furloughed approximately 100 employees Dec. 14-16 because natural gas on the spot market became so expensive that the company could not afford to operate. The shutdown marked the second time in 2013 that the company had to discontinue operations due to excessively high natural gas prices, the article states.

The problem is a lack of pipeline capacity for supplying natural gas to New England. There are only two major pipelines into New England, and on the coldest day of the year, prices spike for buyers who do not have fixed price contracts. “During the cold snap earlier in the month, prices on the spot market for delivery into New England more than tripled, reaching an average of $33 per dekatherm compared to $6.50 per dekatherm last December,” the Union Leader reported. “With more customers acquiring natural gas service, the demand continues to outpace supply, with no new pipelines expected to come on line for at least another two years. As a result, future cold snaps could result in even wilder price swings.”

Natural gas price spikes have also interrupted company operations in Maine, according to the Portland Press Herald. Two Maine companies, Huhtamaki Inc. and UPM, told the newspaper they expect to halt production due to high natural gas prices. “Such measures are harbingers of what Maine’s manufacturing sector may face in the next few months, highlighting just how vulnerable the state has become to New England’s shortage of natural gas, the source of about half the region’s electricity,” the Press Heraldreported. “Although the United States is awash with cheap natural gas, a lack of pipeline capacity north of New York is pinching the supply in New England, where there is growing demand for use in power production, home heating and manufacturing.”

To read the New Hampshire Union Leader article, click here.

To read the Portland Press Herald article, click here.

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