Huntsman Sr. fears traders manipulating natural gas

Jon M. Huntsman Sr. is again raising allegations that traders on the New York Mercantile Exchange are manipulating natural gas prices, squeezing American industries and consumers.

Huntsman, founder and chairman of Salt Lake-based Huntsman Corp., said Friday that skyrocketing natural gas prices spell disaster for businesses, farmers and the 55 percent of U.S. consumers who heat their homes with natural gas.

On Friday, natural gas prices for January delivery jumped as much as 3.5 percent, reaching $15.52 per million British thermal units on the New York Mercantile Exchange, the highest since trading began on NYMEX, according to Bloomberg News.

"The traders and speculators will tell you these ridiculously high prices are simply the result of supply and demand. Nonsense," Huntsman said in a prepared statement. "There is no shortage of natural gas, and demand is no greater than it has been for several years. Further, inventories are at near-record levels."

Natural gas reserves in underground storage totaled 3.2 billion cubic feet for the week ending Dec. 2, roughly 2 percent less in reserves than last year at this time, but 7 percent above the five-year average, according to the U.S. Energy Information Administration.

"The manufacturing industries in America are being screwed," said Scott Gutting, president of Energy Strategies, a Salt Lake-based energy consulting firm. "The fundamentals of the market don't support the price volatility that we see."

Gutting added that today's trading rules for natural gas are less strict than they were five years ago.

"There was a cap in movement up and down," Gutting said. "Enron lobbied to get that changed because they wanted volatility. That's how they made money off customers. The rules need to be changed back to where they were pre-Enron manipulation."

For consumers, higher trading prices mean higher home-heating bills. In Utah, Questar Gas Co. customers will pay nearly 38 percent more this year to heat their homes compared to 2004.

Two years ago, Huntsman Corp. pushed for Congressional hearings into whether the natural gas markets were being manipulated. In 2004, the Commodity Futures Trading Commission completed a seven-month investigation into the sharp upward movement of natural gas prices that occurred in late 2003. That report did not uncover any evidence of price manipulation, but blamed the increases on colder-than-expected weather in the Northeast.

Don Olsen, a spokesman for Huntsman Corp., said the CFTC investigation was a farce.