Supply outlook good news for consumers, bad news for producers
The U.S. may be experiencing its coldest winter in a quarter century -- and while that's bad news for producers, consumers have reason to celebrate.True, futures prices for natural gas have more than doubled in the last 5 months to trade above $5 per million British thermal units in New York, but they're nowhere near the high above $13 they saw in 2008 and they're likely to sit tight at current levels for awhile because of ample supplies and forecasts for growing production.
"There is virtually no way that natural gas will have any supply restraints for 2010, and probably not for 2011," said Charles Perry, president of energy consulting firm Perry Management. "There is simply too much gas available to allow any increase in prices" for this year.
'There is virtually no way that natural gas will have any supply restraints for 2010, and probably not for 2011.'
Charles Perry, Perry Management
U.S. natural-gas production climbed 10.6% from 2007 to 2009, according to Perry, with most of the increase due almost entirely to new production derived from shale, a geologic formation.
"This boom caused over-production in gas in the U.S.," said Perry. The oversupply, along with a recession and fall in consumption of 1% from 2007 to 2009, helped drive wellhead gas prices down to $3.70 in 2009 from $8.07 in 2008, he said.
This winter's cold snap in the U.S. appears to have helped stabilize prices for now.
Population-weighted, from the Plains east, this winter will likely beat the 2000-2001 winter season to become the coldest winter since 1983-1984, according to Joe Bastardi, a senior meteorologist at AccuWeather.com, with the weather in the last 10-15 days of this month probably cold enough to officially make this winter the coldest in a quarter century, he said....MORE
