1. Natural Gas: Summer 2005 Steve Harvey FERC July 25, 2005 Federal Energy Regulatory Commission

2. Gas prices for the past year (Daily NYMEX prices for the prompt month) Price ($/MMBtu)

3. Gas prices for the last year have remained near recent highs Henry Hub Price ($/MMBtu)

4. Gas prices are not related to storage inventory levels alone

5. Clearly gas prices have some relationship to oil prices too

6. Gas prices do appear related to oil and storage inventories 2005 1999-2003 2004

7. Other effects may relate to financial trading

8. Financial trading prices appear to be driving physical prices at times $6.50 $6.70 $6.90 $7.10 $7.30 $7.50 $7.70 $7.90 $8.10 $8.30 $8.50 10:0010:3011:0011:3012:0012:3013:0013:3014:00 Price ($ /MMBtu) EIA Report Issued Monthly Index for December = $7.78 NYMEX Settlement for December = $7.976

9. Hard to measure the extent of financial trading Open Interest (thousand contracts)

10. Financial trading activity appears to be increasing in 2004