FW: Why Are Gas Prices So High?

-----Original Message-----
From: Stanley.K.Horton@dynegy.com [mailto:Stanley.K.Horton@dynegy.com]
Sent: Monday, March 25, 2002 11:23 AM
To: Parks, Joe
Subject: Why Are Gas Prices So High?

----- Forwarded by Stanley K Horton/HOU/Dynegy on 03/25/02 11:22 AM -----

RJ EnergyGroup
<RJEnergygroup@ec To: "'RJ Customer'" <rj@rjf.com<
m.rjf.com< cc:
Subject: Why Are Gas Prices So High?
03/25/02 07:57 AM

<<iEne032502b_1631.pdf<<

Raymond James Energy Stat of the Week, published 3/25/2002.

With the recent surge in U.S. natural gas prices many analysts are
scratching their heads in disbelief. Of course there will continue to be
volatility, but we believe these higher gas prices are not only
sustainable, but will likely move up through the summer (similar to what
happened in 2000). For the past two months it has become very evident that
U.S. natural gas supply/demand on a weather-adjusted basis is much tighter
than the same time last year. The market has finally begun to realize the
extent of this tightness, as more "normal" weather over the past several
weeks has removed a substantial amount of the natural gas storage overhang.
This shift in supply/demand should become even more evident as we move into
the early part of the injection season in April/May. Look for summer gas
injections to be down 30% to 50% from last year's numbers. This should be
the bullish driver of summer natural gas prices.

Next week, we should have even more bullish gas news, as the preliminary
numbers from our first quarter U.S. E&P production survey are likely to
surprise many on the Street. Stay tuned....

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(See attached file: iEne032502b_1631.pdf)