Atural AS Lectricity

Capitol Area Energy, Inc.
January 4, 2008
David Babin
5105 Pryor Lane
Austin, Texas 78734
NATURAL GAS & ELECTRICITY Phone 512-266-4710

Fax 512-266-4712
www.capitolareaenergy.com
NATURAL GAS
Natural gas futures for February delivery on the NYMEX ended $ 0.038 higher yesterday to settle at $
NATURAL GAS PRICES
7.879 per MMBtu, reaching a 7-week high after a day of volatile trading, with the market weighing
mild weather this week against the possibility of cold weather next week. Prices were driven higher NYMEX Last Change
by predictions of a frigid air in the Northeast and Midwest next week. The fundamental struggle is Feb 08 7.84 +0.17
the current moderation of above-average temperatures versus some forecasts bringing cold back
pretty quick and the idea that storage this week will be difficult to predict after low number week. 03 Month Strip 7.81 +0.12
This week’s storage could show a sizeable withdrawal to balance out last week’s below-normal draw. 06 Month Strip 7.85 +0.10
The National Oceanic and Atmospheric Administration has predicted above-normal temperatures
across the US in January, with the exception of the northernmost tier of the country and parts of 12 Month Strip 8.13 +0.07
California. Last week, the EIA reported a storage withdrawal of 87 Bcf, less than was expected, 18 Month Strip 8.21 +0.00
compared to a withdrawal of 47 Bcf a year ago. The report showed that total storage levels of 2.921
Tcf are still 222 Bcf above the 5-year average. For this week, look for a withdrawal of 140 to 150
Bcf. For this week, major resistance is seen at $ 8.005, with minor at $ 7.7.885, while major support
is seen at $ 7.165 and minor at $ 7.750. Jan 2008 Gas Prices
Point Price
NYMEX Historical Natural Gas Prices NYMEX 7.172
2005 2006 2007 Houston Ship Channel 6.73

Waha Hub 6.45
15.00
EIA GAS STORAGE

10.00
Region Bcf Change
East 1,604 -53
5.00 West 395 -18
Prod 922 -16
0.00 Total 2,921 -87
J F M A M J J A S O N D
2005 6.21 6.29 6.30 7.32 6.75 6.12 6.98 7.65 10.85 13.91 13.83 11.18
◄ LINKS ►
2006 11.43 8.40 7.11 7.23 7.20 5.93 5.89 7.04 6.82 4.20 7.15 8.32
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2007 5.84 6.92 7.65 7.56 7.51 7.59 6.93 6.11 5.43 6.42 7.27 7.17 electricity bids, simply complete our
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Crude Energy Short Term Outlook LETTER OF AUTHORIZATION
If you are currently under contract

Global oil markets will likely remain tight through 2008, then ease moderately in 2009. EIA projects an would like notification of
that world oil demand will continue to grow faster than oil supply outside of the Organization of the
natural gas or electricity rates,
Petroleum Exporting Countries (OPEC) in 2008, leaving OPEC and inventories to offset the upward please sign up to receive future
pressure on prices. In 2009, higher non-OPEC production and planned additions to OPEC capacity prices.
should relieve some of the tightness in the market. As a result, the level of surplus production
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capacity is projected to grow from its current level of under 2 million barrels per day (bbl/d) to more
than 4 million bbl/d by the end of 2009. The West Texas Intermediate (WTI) crude oil spot price NATURAL GAS &
approached $100 per barrel twice over the last 6 weeks, reaching $99.16 per barrel on November ELECTRICITY SIGN UP
20 and $99.64 per barrel, a record price in nominal terms, on January 2, after falling below $90 in
mid-December. Recent high prices and large price swings reflect the current tight and volatile world
crude oil market. The WTI price is expected to average $94 per barrel in January 2008. The WTI
price, which averaged $72 per barrel in 2007, is expected to average about $87 per barrel in 2008 MCPE AVERAGE
and $82 in 2009. ERCOT Ave Change
Houston 75.27 7.38
North 68.36 1.18
To remove your name for our mailing list, please click here. South 78.09 12.66
Questions or comments? E-mail us at newsletter@capitolareaenergy.com West -6.50 13.47
January 11, 2008
David Babin
5105 Pryor Lane
Austin, Texas 78734

Fax 512-266-4712
NATURAL GAS
Natural gas futures for February on the NYMEX dipped $ 0.049 lower Friday to settle at $ 8.21 per
MMBtu, ahead of the weekend on signs storage supplies are ample as milder weather last week will NATURAL GAS PRICES
cut withdrawals reported this week. It was the highest settlement since November 2nd. Natural gas NYMEX Last Change
prices have fallen 5.5% since closing at a 12-month high of $ 8.637 on November 1st, but are 30%
higher than a year ago. The US economy is already in recession and the US economy grew at a 1% Feb 08 8.21 -0.05
pace in the 4th quarter, according to the median estimate of economists surveyed last month. 03 Month Strip 8.17 -0.02
Growth for all 2008 was projected at 2.3%. Temperatures through March will probably be above
normal in most of the US, the government’s Climate Prediction Center said. Last week, the EIA 06 Month Strip 8.20 -0.01
reported a storage withdrawal of 171 Bcf, about what was expected, compared to a withdrawal of 49 12 Month Strip 8.45 +0.01
Bcf a year ago. The report showed that total storage levels of 2.75 Tcf are still 122 Bcf above the 5-
18 Month Strip 8.47 +0.02
year average. For this week, look for a withdrawal of about 15 to 25 Bcf, compared to a 5-year
average withdrawal of 105 Bcf. For this week, major resistance is seen at $ 8.610, with minor at $
8.320, while major support is seen at $ 7.915 and minor at $ 8.090.
Jan 2008 Gas Prices
NYMEX Historical Natural Gas Prices Point Price
2005 2006 2007 2008 NYMEX 7.172

Houston Ship Channel 6.73
15.00 Waha Hub 6.45
10.00
EIA GAS STORAGE
5.00 Region Bcf Change
East 1,511 -93
0.00 West 375 -20
Prod 864 -58
2005 6.21 6.29 6.30 7.32 6.75 6.12 6.98 7.65 10.85 13.91 13.83 11.18
Total 2,750 -171
2006 11.43 8.40 7.11 7.23 7.20 5.93 5.89 7.04 6.82 4.20 7.15 8.32
2007 5.84 6.92 7.65 7.56 7.51 7.59 6.93 6.11 5.43 6.42 7.27 7.17
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2008 7.17 If you are interested in receiving
electricity bids, simply complete our
What “Natural Gas Storage” is and how it works. back to 512-266-4712
Traditionally, underground storage is defined as the storage of natural gas in underground reservoirs at a different Click Here!
location from which is was produced. Storage locations are generally chosen close to concentrated market areas LETTER OF AUTHORIZATION
to satisfy market demand, stored mainly to guarantee the capability of the gas industry to meet seasonal
changes in demand. Underground storage uses are twofold: First, it adds to the industry's production and delivery
systems, which in turn allows reliability in supply during periods of heavy heating gas demand. Additionally, If you are currently under contract
storage can be used as a means of conservation to avoid waste (such as flaring) when production rates surpass an would like notification of
marketability. A natural gas storage facility has multiple uses as well -- to augment the peak availability of storing
gas produced during periods of low demand; to cover unforeseen production facilities failures; and handle abrupt
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increases in demand. Gas storage is a critical element of the natural gas industry. Producers, transmission and
prices.
distribution companies, marketers, and end-users all benefit directly from the load balancing function of storage.
Unbundling started a process that has fundamentally changed the way storage is used and valued. As an Click Here!
unbundled service, the value of storage in minimizing overall costs to consumers is increasingly being recovered NATURAL GAS &
at rates that reflect its value. Moreover, the traditional marketplace has differentiated between various types of
ELECTRICITY SIGN UP
storage services and has increasingly rewarded flexibility, safety, and reliability. Natural gas, like most other
commodities, can be stored for an indefinite period of time. The exploration, production, and transportation of
natural gas take time, and the natural gas that reaches its destination is not always needed right away, so it is
injected into underground storage facilities. These storage facilities can be located near market centers that do
not have a ready supply of locally produced natural gas. Natural gas storage plays a vital role in maintaining the MCPE AVERAGE
reliability of supply needed to meet the demands of consumers. Historically, when natural gas was a regulated
commodity, storage was part of the bundled product sold by the pipelines to distribution utilities. This all changed ERCOT Ave Change
in 1992 with the introduction of the Federal Energy Regulatory Commission's (FERC) Order 636, which opened up Houston 80.16 16.42
the natural gas market to deregulation. Essentially, this meant that where natural gas storage was required prior
to Order 636 for the operational requirements of the pipelines in meeting the needs of the utilities, it is now North 80.16 16.42
available to anyone seeking storage for commercial purposes or operational requirements.
South 80.16 16.42
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Questions or comments? E-mail us at newsletter@capitolareaenergy.com
January 18, 2008
David Babin
5105 Pryor Lane
Austin, Texas 78734

Fax 512-266-4712
NATURAL GAS
Natural gas futures for February ended $ 0.08 lower on Friday to settle at $ 7.993 per MMBtu, slipping below the NATURAL GAS PRICES
$ 8 mark ahead of the holiday weekend for the first time in 10 days as traders expect milder temperatures
following a cold snap to cut heating demand. Futures got off to a strong start Friday as forecasters predicted NYMEX Last Change
Arctic-like temperatures over the weekend in the Midwest and Northeast. Temperatures dropped into the single
Feb 08 7.99 -0.08
digits and subzero in Chicago Saturday, and into the teens by Sunday in New York. The cold is expected to last for
most of this week before gradually warming by next weekend. By mid-afternoon traders began selling after the 03 Month Strip 7.95 -0.07
Climate Prediction Center’s Global Forecasting System, one of several global weather models, showed warming
during the 11 to 15-day period. Temperatures are expected to rise into the 40’s in the East and into the 30’s in 06 Month Strip 7.99 -0.06
the Midwest. Last week, the EIA reported a storage withdrawal of 59 Bcf, about what was expected, compared to
12 Month Strip 8.25 -0.05
a withdrawal of 83 Bcf a year ago. The report showed that the total storage level of 2.691 Tcf is still 168 Bcf
above the 5-year average. For this week, look for a withdrawal of about 80 to 90 Bcf. For this week, major 18 Month Strip 8.28 -0.04
resistance is seen at $ 8.290, with minor at $ 8.170, while major support is seen at $ 7.700 and minor at $
7.915.
Jan 2008 Gas Prices

NYMEX Historical Natural Gas Prices Point Price
2005 2006 2007 2008 NYMEX 7.172

15.00 Waha Hub 6.45
10.00
EIA GAS STORAGE
East 1,482 -29
0.00 West 351 -24
Prod 858 -6
2005 6.21 6.29 6.30 7.32 6.75 6.12 6.98 7.65 10.85 13.91 13.83 11.18
Total 2,691 -59
2006 11.43 8.40 7.11 7.23 7.20 5.93 5.89 7.04 6.82 4.20 7.15 8.32
2007 5.84 6.92 7.65 7.56 7.51 7.59 6.93 6.11 5.43 6.42 7.27 7.17
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2008 7.17 If you are interested in receiving
Understanding Weather Risk Management back to 512-266-4712
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LETTER OF AUTHORIZATION
Weather is the single most important factor in energy demand. Weather extremes sharpen energy
price spikes and at the same time, they increase consumption. Additionally, milder winters and If you are currently under contract
summers cause reduced revenue for some, and increased revenue for others. Therefore, the impact an would like notification of
of the weather is economically significant. As much as 70 percent of all business activity is affected
by the weather. In the late 1990s, innovative trading companies, primarily in the energy sector, please sign up to receive future
recognized this risk management opportunity and began offering solutions to help companies prices.
manage this class of natural hazard risk. Structured either as derivatives or as insurance contracts,
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weather transactions typically cover local or regional variations in temperature, precipitation, or other
weather features over a period from one week to a full winter or summer season. Warmer weather NATURAL GAS &
can lead to lower margins from fewer volumes of natural gas being sold or transported. Colder ELECTRICITY SIGN UP
weather that increases the volumes of natural gas sold to weather-sensitive customers can result in
the inability of some of our customers to pay their bills. Either warm or cold weather that is outside
the normal range of temperatures can lead to less operating cash flow, thereby increasing short-term
borrowings to meet current cash requirements. Energy traders react to significant weather by buying. MCPE AVERAGE
Generally, hurricanes in the Gulf, cold snaps, and heat waves are things that cause energy prices to ERCOT Ave Change
rise. Hurricanes and severe storms shut down production platforms. Cold snaps and heat waves
boost demand. Focusing on the weather is a must to stay ahead of the game. Houston 69.91 7.51
North 69.91 7.42
South 69.91 -3.77
January 25, 2008
David Babin
5105 Pryor Lane
Austin, Texas 78734

Fax 512-266-4712
NATURAL GAS
Natural gas futures for February ended $ 0.090 higher Friday to settle at $ 7.983, on short covering NATURAL GAS PRICES
as the market retraced some losses from earlier in the week as forecasts for cold weather and a plan
to boost the economy suggest an increase in energy demand. Speculative traders holding short NYMEX Last Change
positions bought back previously sold contracts to cover those positions and get ahead of rising Feb 08 7.98 +0.18
prices. Equities and energy markets got a boost from the Bush administration and Congress’s
approval of a $ 100 billion package of tax credits to be distributed to families and individuals this 03 Month Strip 7.95 +0.17
year. Another $ 50 billion will be distributed to businesses to offset the threat of a recession. In 06 Month Strip 8.00 +0.16
addition, forecasts for colder weather during the 6 to 10-day period in the Northeast and Midwest
supported futures prices, as cold weather would bring increased heating demand. Temperatures are
forecasted to drop into the single digits in New York next weekend and remain in the teens and 20s 18 Month Strip 8.30 +0.14
during the first week of February. Temperatures in Chicago will reach subzero and into the single
digits and teens during the same period. Last week, the EIA reported a storage withdrawal of 155
Bcf, about what was expected, compared to a withdrawal of 166 Bcf a year ago. The report showed Jan 2008 Gas Prices
that total storage levels of 2.536 Tcf are still 174 Bcf above the 5-year average. For this week, look
for a withdrawal of about 270 to 280 Bcf. For this week, major resistance is seen at $ 8.535, with Point Price
minor at $ 8.035, while major support is seen at $ 7.725 and minor at $ 7.890. NYMEX 7.172
NYMEX Historical Natural Gas Prices Waha Hub 6.45
2005 2006 2007 2008
EIA GAS STORAGE

15.00
Region Bcf Change
10.00 East 1,402 -80

West 325 -26
5.00 Prod 809 -49
Total 2,536 -155

0.00
◄ LINKS ►
2005 6.21 6.29 6.30 7.32 6.75 6.12 6.98 7.65 10.85 13.91 13.83 11.18
2007 5.84 6.92 7.65 7.56 7.51 7.59 6.93 6.11 5.43 6.42 7.27 7.17
back to 512-266-4712
2008 7.17 Click Here!
LFG as an Energy Source If you are currently under contract

With rising concern about energy sources, landfill gas (LFG) has emerged as an easily available, an would like notification of
economically competitive, and proven energy resource. As of January 2005, there were 375 LFG natural gas or electricity rates,
energy (LFGE) projects in the United States, generating electricity or providing direct-use energy please sign up to receive future
sources for boilers, furnaces, and other applications. Approximately 100 direct-use LFGE projects in prices.
operation burned over 70 billion cubic feet (Bcf) of LFGE in 2004. According to the US Environmental Click Here!
Protection Agency's (EPA) Landfill Methane Outreach Program (LMOP), there are still more than 600 NATURAL GAS &
landfills that could be developed, offering a potential gas flow capacity of over 280 Bcf per year. LFG
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is a byproduct of the decay process of organic matter in municipal solid waste (MSW) landfills. The
gas typically contains approximately 50% methane and 50% carbon dioxide, with some additional
trace compounds. The heat value of LFG ranges from 400 to 600 British thermal units (Btu) per
cubic foot and can burn in virtually any application with minor adjustments to air/fuel ratios. The use MCPE AVERAGE
of LFG provides environmental and economic benefits, and users of LFG have achieved significant
cost savings compared to traditional fuel usage due primarily to the fact that LFG costs are ERCOT Ave Change
consistently lower than the cost of natural gas. Additionally, because LFG is comprised of Houston 62.39 6.05
approximately 50% methane, a major greenhouse gas, reducing landfill methane emissions by
utilizing it as a fuel helps businesses, energy providers, and communities protect the environment North 62.46 6.12
and build a more sustainable energy future. South 62.64 6.29
February 1, 2008
David Babin
5105 Pryor Lane
Austin, Texas 78734

Fax 512-266-4712
NATURAL GAS
Natural gas futures for March on the NYMEX dropped $ 0.334 lower Friday to settle at $ 7.74 per NATURAL GAS PRICES
MMBtu as moderating temperatures and tumbling crude oil prices placed downward pressure on the NYMEX Last Change
natural gas market. March natural gas posted the largest single-day net and percentage drop since
November 28th. Forecasts of predominantly mild weather in the East over the next couple of weeks March 08 7.74 -0.33
drove prices lower. Forecasters are predicting below-normal temperatures from eastern Montana to 03 Month Strip 7.88 -0.30
Michigan’s upper peninsula from February 6th to February 10th, with above normal-temperatures
expected in the Northeast over the same period. Normal to above-normal temperatures are 06 Month Strip 7.90 -0.28
predicted for most of the continental US from February 11th to February 15th. The National Weather 12 Month Strip 8.23 -0.24
Service is forecasting above-normal temperatures across the eastern half of the nation for the month
18 Month Strip 8.21 -0.22
of February. Falling crude oil prices were also pressuring natural gas prices lower. Last week, the EIA
reported a storage withdrawal of 274 Bcf, a bit more than expected, compared to a withdrawal of
185 Bcf a year ago. The report showed that total storage levels of 2.262 Tcf are still 85 Bcf above
the 5-year average. For this week, look for a withdrawal of about 120 to 130 Bcf. For this week, Feb 2008 Gas Prices
major resistance is seen at $ 8.400, with minor at $ 7.860, while major support is seen at $ 7.535 Point Price
and minor at $ 7.690.
NYMEX 7.996
NYMEX Historical Natural Gas Prices Waha Hub 7.47
2005 2006 2007 2008
EIA GAS STORAGE

15.00
Region Bcf Change
10.00 East 1,257 -145

West 285 -40
5.00 Prod 720 -89
Total 2,262 -274

0.00
◄ LINKS ►
2005 6.21 6.29 6.30 7.32 6.75 6.12 6.98 7.65 10.85 13.91 13.83 11.18
2007 5.84 6.92 7.65 7.56 7.51 7.59 6.93 6.11 5.43 6.42 7.27 7.17
back to 512-266-4712
2008 7.17 Click Here!
Renewable Energy If you are currently under contract

an would like notification of
About 60% of all the energy used in the world comes from burning oil and natural gas. Despite natural gas or electricity rates,
massive exploration programs, few large outfields have been found in recent years. This could well please sign up to receive future
mean we have discovered most of the world's oil sources, and that, in the future, oil can run out prices.
faster than anticipated. The current production of oil worldwide is enough to meet our present energy Click Here!
needs. At the present rate of consumption, the world's reserves are just enough to last for the next NATURAL GAS &
100 years. Unfortunately, the world's energy demand has been growing steadily over the past 50
years, and this trend is likely to continue. Over the last few decades, it is becoming increasingly clear ELECTRICITY SIGN UP
that reliance on oil and coal as the principle source of energy is an unsustainable long-term position.
Despite this realization, the energy playing field is leveraged towards dependence on these sources.
Increasing world demand, coupled with a dwindling supply, supply instabilities, and negative
environmental impacts of oil and coal, are all strong reasons to promote renewable energy
MCPE AVERAGE
technologies. Renewable energy is energy which can be replenished at the same rate it is used. ERCOT Ave Change
Renewable energy is the term used to describe energy that comes from sources whose supplies are
Houston 79.38 31.28
regenerative and virtually inexhaustible. Among these sources are sunshine, wind, water, vegetation,
and the heat of the earth North 79.10 30.93
South 78.15 29.81
To remove your name for our mailing list, please click here. West 38.09 -18.49
February 8, 2008
David Babin
5105 Pryor Lane
Austin, Texas 78734

Fax 512-266-4712
NATURAL GAS
Natural gas futures for March on the NYMEX rose $ 0.226 higher yesterday to settle at $ 8.531 per MMBtu, the NATURAL GAS PRICES
highest in 3 months on forecasts that colder weather will linger into next week and speculation the US economy
NYMEX Last Change
may soon rebound, lifting demand. Prices rose sharply Monday, continuing their 5-day climb upward amid bone
chilling weather in the north. Temperatures in Chicago dropped into the single digits and below zero yesterday, March 08 8.30 +0.19
and into the teens in New York. Temperatures for the balance of the week will reach highs in the 30s and 40s in
Boston and New York. The Midwest will reach highs in the 20s and 30s. Temperatures are expected to drop 03 Month Strip 8.33 +0.19
again next week in the Northeast. Speculative traders have remained net short in the market for some time,
betting on a downward price spiral in price. Speculative traders have stayed short so long and so aggressively
that now they are looking at a combination of weather and LNG not getting to the US with Asia pulling on supplies, 12 Month Strip 8.75 +0.18
and now storage is not going to be as big of an overhang issue. Last week, the EIA reported a storage withdrawal
of 200 Bcf, considerably higher than expected, compared to a withdrawal of 219 Bcf a year ago. The report 18 Month Strip 8.67 +0.15
showed that total storage levels of 2.062 Tcf are still 62 Bcf above the 5-year average. For this week, look for a
withdrawal of about 140 to 150 Bcf. For this week, major resistance is seen at $ 8.830, with minor at $ 8.630,
while major support is seen at $ 8.330 and minor at $ 8.510.
Feb 2008 Gas Prices
Point Price
2005 2006 2007 2008 Houston Ship Channel 7.74

Waha Hub 7.47
15.00
EIA GAS STORAGE

10.00
Region Bcf Change
5.00 East 1,138 -119

West 254 -31
0.00 Prod 670 -50

Total 2,062 -200
2005 6.21 6.29 6.30 7.32 6.75 6.12 6.98 7.65 10.85 13.91 13.83 11.18
2006 11.43 8.40 7.11 7.23 7.20 5.93 5.89 7.04 6.82 4.20 7.15 8.32
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2007 5.84 6.92 7.65 7.56 7.51 7.59 6.93 6.11 5.43 6.42 7.27 7.17 If you are interested in receiving
2008 7.17 7.996 electricity bids, simply complete our
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Hydro Power Market Potential LETTER OF AUTHORIZATION
The growing world-wide demand for renewable energy projects is being driven by ever increasing global energy
consumption, and the availability of carbon and renewable energy credits. Renewable energy is entering a new If you are currently under contract
phase with additional funding becoming available from governments, from socially responsible equity funds, and an would like notification of
from public capital raisings. Hydropower is the capture of the energy derived from moving water for some useful
purpose. Prior to the widespread availability of commercial electric power, hydropower was used for irrigation,
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milling of grain, textile manufacture, and the operation of sawmills. Hydropower produces essentially no carbon
prices.
dioxide or other harmful emissions. In contrast to burning fossil fuels, this energy is not a significant contributor to
global warming through production of CO2. Hydroelectric power can be far less expensive than the electricity Click Here!
generated from fossil fuel or nuclear energy. Areas with abundant hydroelectric power attract industry. NATURAL GAS &
Environmental concerns about the effects of reservoirs may prohibit development of economic hydropower
sources in some areas. Hydropower currently accounts for approximately 20% of the world's electricity ELECTRICITY SIGN UP
production, with about 650,000 MW installed and approximately 135,000 MW under construction or in the final
planning stages. Notwithstanding this effort, there are large untapped resources on all continents, particularly in
areas of the world that are likely to experience the greatest growth in power demand over the next century. It is
estimated that only about a quarter of the economically exploitable water resources has been developed to date, MCPE AVERAGE
leaving the potential for hydro to continue to play a large role in sustaining renewable global electricity production
in the future. Apart from a few countries with an abundance, hydro power is normally applied to peak load ERCOT Ave Change
demand because it can be readily stopped and started. Nevertheless, hydroelectric power is probably not a major Houston 55.28 -1.78
option for the future of energy production in the developed nations, however, because most major sites within
these nations are either already being exploited or are unavailable for other reasons, such as environmental North 55.48 -1.52
considerations.
South 56.17 -0.62
March 14, 2008
David Babin
5105 Pryor Lane
Austin, Texas 78734

Fax 512-266-4712
NATURAL GAS
Natural gas futures for April delivery on the NYMEX fell $ 0.362 lower Friday to settle at $ 9.868 per MMBtu,
falling the most in 6 weeks as crude oil slipped from a record high and speculators trimmed commodities NATURAL GAS PRICES
positions. The strategy of shorting the dollar and buying oil and gold is probably about over. Now is not the time NYMEX Last Change
to enter such a trade. Natural gas futures are overbought because of the dollar and the need for investors to buy
cheap energy. Investors turned to natural gas as a cheaper alternative to participate in the rally in energy April 08 9.87 -0.36
commodities as it lagged behind the rise in crude and heating oil. Commodities may be falling on signals the US
fuel inventories will rise and consumption will drop because of the economic slowdown. Momentum is seeming 03 Month Strip 9.95 -0.35
to wane in on commodities and if equities start sell of more, then everything could get crumble. The Standard & 06 Month Strip 10.07 -0.34
Poor’s 500 Index declined 2.5% and the DJ Industrial Average 2% on Friday. The consensus is that people are
starting to build positions with cheap puts that are way out of the money, way out in time, into next winter. The 12 Month Strip 10.42 -0.33
arrival of spring next week may lower demand for natural gas and put pressure on prices. Last Thursday, the EIA
18 Month Strip 10.02 -0.29
reported a storage withdrawal of 86 Bcf, about what was expected, compared to a withdrawal of 104 Bcf a year
ago. The report showed that total storage levels of 1.398 Tcf are still 57 Bcf above the 5-year average. For this
week, look for a withdrawal of about 85 to 95 Bcf. For this week, major resistance is seen at $ 10.155, with
minor at $ 9.990, while major support is seen at $ 9.040 and minor at $ 9.810. March 2008 Gas Prices
Point Price
2005 2006 2007 2008 Houston Ship Channel 8.73

Waha Hub 8.36
15.00
EIA GAS STORAGE

10.00
Region Bcf Change
5.00 East 706 -54

West 180 -9
0.00 Prod 512 -23

Total 1,398 -86
2005 6.21 6.29 6.30 7.32 6.75 6.12 6.98 7.65 10.85 13.91 13.83 11.18
2006 11.43 8.40 7.11 7.23 7.20 5.93 5.89 7.04 6.82 4.20 7.15 8.32
◄ LINKS ►
2007 5.84 6.92 7.65 7.56 7.51 7.59 6.93 6.11 5.43 6.42 7.27 7.17 If you are interested in receiving
2008 7.17 7.996 9.83 electricity bids, simply complete our
back to 512-266-4712
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Market Potential 2008
The last few decades have seen rapid growth in the consumption of the fossil fuels such as oil, gas, If you are currently under contract
and coal. Production, on the other hand, has not increased to match the rise in consumption, an would like notification of
primarily due to limited availability of these resources. The situation has been exacerbated by natural gas or electricity rates,
political instability in the Middle East and the catastrophic hurricanes of 2005, which led to sharp please sign up to receive future
rises in the prices of these resources, and, in some cases, acute scarcity. Industrialized nations that prices.
are dependent on other countries for oil have been severely impacted and as a result, the U.S. Click Here!
government, along with state governments and the energy industry, has ramped up its support for
NATURAL GAS &
alternative energy sources. Given its environmental and economic benefits, together with the vast
availability of feedstock, ethanol has taken on prominence as one of the most favored alternatives to ELECTRICITY SIGN UP
fossil fuel. If you are interested, the Market for Cellulose Ethanol report is an in-depth analysis of the
prospects for the use of cellulose ethanol as a fuel. The report includes a comprehensive analysis of
how cellulose ethanol is produced, its cost-effectiveness, the growth drivers promoting the use of
ethanol over other fuels, the barriers to market, and much more. The report also focuses on the steps MCPE AVERAGE
the U.S. government is taking to promote ethanol use, including tax incentives, funding for research ERCOT Ave Change
and development, funding for technology, and other measures. The report also covers the basics of
Houston 70.36 +1.34
ethanol production; how ethanol differs from other fuels, and the benefits to consumers from using
ethanol. North 52.16 -14.49
South 80.25 +11.24
March 21, 2008
David Babin
NATURAL GAS & ELECTRICITY 5105 Pryor Lane

Austin, Texas 78734
Phone 512-266-4710
NATURAL GAS Fax 512-266-4712
Natural gas futures for April on the NYMEX ended $ 0.041 higher last Thursday to settle at $ 9.065 per MMBtu,
ahead of the holiday weekend. Trading was shut down on Friday for observance of Good Friday. The market
traded choppy Thursday, mostly down, with a strong late-day rally as hedge funds holding long positions bid the
price higher in an effort to prevent margin calls during floor trading hours. Funds who are holding length were
keeping a $ 9 plus settle to avoid the pain of a margin call. The market is still trading way out of whack with
NATURAL GAS PRICES
supply and demand fundamentals. The roughly 13% gains made during the last week from investors pouring NYMEX Last Change
money into commodities to flee equity investments as the dollar weakened. The dollar gained some strength
Thursday, forcing an earlier sell off in commodities. Cold weather in the Northeast and Midwest this week did April 08 9.06 +0.04
little to rouse market reaction. Temperatures are expected to be below-normal this week. Last Thursday marked
the first day of spring. Last week, the EIA reported a storage withdrawal of 86 Bcf, about what was expected,
compared to a withdrawal of 104 Bcf a year ago. The report showed that total storage levels of 1.398 Tcf are still 06 Month Strip 9.25 +0.03
57 Bcf above the 5-year average. For this week, look for a withdrawal of about 80 to 90 Bcf. For this week, major
resistance is seen at $ 10.015, with minor at $ 9.195, while major support is seen at $ 8.335 and minor at $ 12 Month Strip 9.59 +0.03
8.945. 18 Month Strip 9.19 +0.01
NYMEX Historical Natural Gas Prices

March 2008 Gas Prices
2005 2006 2007 2008
Point Price
15.00 NYMEX 9.83

10.00 Waha Hub 8.36
5.00
EIA GAS STORAGE
East 640 -66
2005 6.21 6.29 6.30 7.32 6.75 6.12 6.98 7.65 10.85 13.91 13.83 11.18 West 183 3
2006 11.43 8.40 7.11 7.23 7.20 5.93 5.89 7.04 6.82 4.20 7.15 8.32 Prod 490 -22
2007 5.84 6.92 7.65 7.56 7.51 7.59 6.93 6.11 5.43 6.42 7.27 7.17 Total 1,313 -85
2008 7.17 7.996 9.83
◄ LINKS ►
Demand Across Seas If you are interested in receiving
With more than 1 billion people each, China and India have experienced rapid economic growth in recent decades electricity bids, simply complete our
– on an unprecedented scale in economic history – credited to their policies of reform and economic openness. Letter of Authorization and fax it
Moving gradually from state-planned agricultural economies into global manufacturing and services powerhouses back to 512-266-4712
has helped China and India reduce poverty. The strong expansion of the Chinese and Indian economies over the
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last decade leaves no doubt about their impact globally. After economic reforms, when India entered the global
energy market, it encountered an important competitor, the People’s Republic of China (PRC), one of the fastest- LETTER OF AUTHORIZATION
growing economies in the world, and a rising military power with a vast appetite for oil and other raw materials—
and the financial resources to satisfy that appetite. China is already well ahead of India in the search for new
If you are currently under contract
energy sources. Since 2000, China National Petroleum Corporation (CNPC) has invested United States Dollars
an would like notification of
(USD) $45 billion in this search, while India’s Oil and Natural Gas Corporation Limited (ONGC) has invested just USD
$3.5 billion. The vast foreign-exchange reserves available to China’s state-owned oil firms have enabled them to natural gas or electricity rates,
undercut India’s efforts to obtain oil beds. Furthermore, as recent events underscore, the Sino-Indian competition please sign up to receive future
for new energy sources in Central Asia is well underway. China and India are the world’s leading energy prices.
consumers, having very similar patterns of energy mix, with a high reliance on coal. Both economies are also Click Here!
heavily dependent on foreign oil. However, China’s biomass consumption is about 50% of that of India. In India,
there are focused programs for promoting renewable energy. At present, renewable energy comprises about 5% of NATURAL GAS &
the energy mix. These include programs for the rural sector, solar energy, power generation, and so on. The Ministry ELECTRICITY SIGN UP
of Non-Conventional Energy Sources (MNES) has set a goal of installing 10% of additional power generation
capacity in the country through grid-connected renewable power by 2012. With a population of over 2.5 billion and
booming economic growth, China and India are going to play an increasingly important role in global economic
matters and energy markets. Both of these countries are heavily dependent on oil, mostly due to the advance of MCPE AVERAGE
the transportation sector in the developing countries of the region. Though China and India are rich in coal reserves,
the quality of coal is not good and there are restrictions on coal use due to environmental considerations. In terms ERCOT Ave Change
of oil production developments, these two neighbors suffer from natural depletion and lack of investment in the
exploration and production sectors. China has the largest oil reserves in the region, but Chinese production capacity Houston 46.18 -6.87
has seen very limited growth. The heavy dependence on oil from the Middle East has led to these countries paying North 47.21 +5.85
premium for a long time. Growing energy demand in the region could also heighten competition for imports in the
regional market. Regional geopolitical and external production challenges can also exert pressures on future South 45.09 -5.35
energy supplies in these Asian giants.
West 30.23 +61.34
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March 28, 2008
David Babin
NATURAL GAS & ELECTRICITY 5105 Pryor Lane

Austin, Texas 78734
Phone 512-266-4710
Fax 512-266-4712
NATURAL GAS www.capitolareaenergy.com
Natural gas futures for May ended $ 0.113 higher Friday to settle at $ 9.80 per MMBtu, on short-covering by
speculators ahead of the weekend. Although the storage data came in below expectations last week, ongoing
concerns about possible supply constraints toward the end of the winter heating season are providing support for NATURAL GAS PRICES
natural gas futures. Natural gas has rallied 31% this year and 8% last week, forcing those with short positions to
buy. Storage levels may end the heating season near 1.25 Tcf. Last year at this time supplies totaled 1.517 Tcf. NYMEX Last Change
Shrinking inventories and higher demand for natural gas-fired power generation may continue to support elevated May 08 9.80 +0.00
prices depending on weather and production. Declining imports of LNG are also playing a role. Imports of LNG for
March are averaging 800 MMcf per day, about one-third the daily average of a year ago. Last week, the EIA 03 Month Strip 9.75 +0.00
reported a storage withdrawal of 36 Bcf, somewhat less than expected, compared to a withdrawal of 11 Bcf a
year ago. The report showed that total storage levels of 1.277 Tcf are still 33 Bcf about the 5-year average. For
this week, look for a withdrawal of about 10 to 20 Bcf. For this week, major resistance is seen at $ 10.315, with 12 Month Strip 10.28 +0.00
minor at $ 9.895, while major support is seen at $ 8.53 and minor at $ 9.690.
NYMEX Historical Natural Gas Prices March 2008 Gas Prices

Point Price
2005 2006 2007 2008
NYMEX 9.83
15.00 Houston Ship Channel 8.73

Waha Hub 8.36
10.00
EIA GAS STORAGE

5.00
Region Bcf Change
0.00 East 607 -33

West 176 -7
2005 6.21 6.29 6.30 7.32 6.75 6.12 6.98 7.65 10.85 13.91 13.83 11.18 Prod 494 4
2006 11.43 8.40 7.11 7.23 7.20 5.93 5.89 7.04 6.82 4.20 7.15 8.32 Total 1,277 -36
2007 5.84 6.92 7.65 7.56 7.51 7.59 6.93 6.11 5.43 6.42 7.27 7.17
2008 7.17 7.996 9.83 ◄ LINKS ►
Hedge Funds Letter of Authorization and fax it
back to 512-266-4712
Hedge funds are private investment funds charging a performance fee and typically open to only a
limited range of qualified investors. In the United States, hedge funds are open to accredited investors Click Here!
only. Because of this restriction, they are usually exempt from any direct regulation by regulatory LETTER OF AUTHORIZATION
bodies. Hedge funds are credited to Alfred Winslow Jones for their invention in 1949. Speculative
energy trading has a strong future, but it will not be the traditional utilities and energy merchants that If you are currently under contract
will create and maturate that market. While much of the energy industry has returned to the relative an would like notification of
safety of trading around assets and marketing activities, energy markets have become characterized natural gas or electricity rates,
across all energy commodities by increasing prices and price volatilities. Oil markets are booming and please sign up to receive future
were not at all impacted by the Enron collapse. Energy trading will now be dominated by more prices.
sophisticated and well-capitalized financial players such as hedge funds and investment banks, as Click Here!
well as by multinational energy companies with a global footprint, while electric utilities are more
NATURAL GAS &
marginalized to niche markets. Evidence of the fund’s influence on oil markets has been the 55%
growth in open interest on Nymex crude, heating oil and gasoline contracts over last year and the ELECTRICITY SIGN UP
more violent and volatile intraday trading moving during recent months. These market drivers are
bringing greater financialization and maturation to the energy complex. According to research, it can
be established that there are over two hundred known hedge funds active in the energy sector with
many more information. To put this in some context, there are more than 8,100 hedge funds globally MCPE AVERAGE
managing over $1 trillion in assets today. Energy is still a relatively small but rapidly growing ERCOT Ave Change
component of their universe. There are many factors responsible for this change in hedge fund
Houston 57.36 -11.66
strategy. For one thing, traditional equity returns this year have been flat so that many funds are not
making the kinds of returns expected for this type of investment. One is for sure that it continues to North 57.11 -16.01
make it difficult to go on fundamentals alone when considering commodity pricing.
South 57.27 -9.33

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Capitol Area Energy, Inc.

NATURAL GAS & ELECTRICITY Phone 512-266-4710

2005 2006 2007 Houston Ship Channel 6.73

EIA GAS STORAGE

If you are currently under contract

NATURAL GAS & ELECTRICITY Phone 512-266-4710

2005 2006 2007 2008 NYMEX 7.172

15.00 Waha Hub 6.45

NATURAL GAS & ELECTRICITY Phone 512-266-4710

Jan 2008 Gas Prices

2005 2006 2007 2008 NYMEX 7.172

15.00 Waha Hub 6.45

NATURAL GAS & ELECTRICITY Phone 512-266-4710

2005 2006 2007 2008

EIA GAS STORAGE

10.00 East 1,402 -80

5.00 Prod 809 -49

Total 2,536 -155

LFG as an Energy Source If you are currently under contract

NATURAL GAS & ELECTRICITY Phone 512-266-4710

2005 2006 2007 2008

EIA GAS STORAGE

10.00 East 1,257 -145

5.00 Prod 720 -89

Total 2,262 -274

Renewable Energy If you are currently under contract

NATURAL GAS & ELECTRICITY Phone 512-266-4710

2005 2006 2007 2008 Houston Ship Channel 7.74

EIA GAS STORAGE

5.00 East 1,138 -119

0.00 Prod 670 -50

NATURAL GAS & ELECTRICITY Phone 512-266-4710

2005 2006 2007 2008 Houston Ship Channel 8.73

EIA GAS STORAGE

5.00 East 706 -54

0.00 Prod 512 -23

NATURAL GAS & ELECTRICITY 5105 Pryor Lane

NYMEX Historical Natural Gas Prices

15.00 NYMEX 9.83

10.00 Waha Hub 8.36

NATURAL GAS & ELECTRICITY 5105 Pryor Lane

NYMEX Historical Natural Gas Prices March 2008 Gas Prices

15.00 Houston Ship Channel 8.73

EIA GAS STORAGE

0.00 East 607 -33

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