• Weather is the principal driver of demand. Weather changes can be unexpected, prolonged and/or quite severe. Weather also affects the supply side, although the effect tends to be involve smaller volumes and the difficulties are quickly resolved.

• Economic and business conditions - economic growth may increase demand, resulting in higher utilization of the wellhead productive capacity, pipeline capacity - and may result in higher prices and lower levels of stocks going into and during the heating season. Expectations of market participants, as well, are a factor. It may have been the expectation of increasing market scarcity last spring that led to the short-lived surge in futures and cash prices. The lack of market fundamentals to justify this trend led to a subsequent reversal in prices.

• Stock levels are an indicator of readily available supplies.

• Pipeline capacity - bottlenecks in the system during heavy demand can be a factor in price volatility.

• Operational difficulties can arise for a number of reasons including lags in adjustments. This aspect can be exacerbated by transportation constraints or diminishing volumes in storage.

• Lack of timely, reliable information: without good information, the market can be greatly affected by "market perceptions" which may not accurately reflect the underlying supply/demand conditions.

Slide 7 of 17