We are expecting a decline toward $2.00 before the summer cooling season kicks in.
From the Energy Information Administration:
Cold temperatures, low prices lead to record-high winter power burn
Consumption of natural gas for electric power generation (power burn) in 2015 hit record levels earlier this year and has remained elevated through March, according to Bentek Energy data, averaging 22.7 billion cubic feet per day (Bcf/d) from January 1 through March 25. The increase in power burn has largely been the result of two factors: low natural gas prices and cold weather.
In many regions, natural gas competes with coal as a generation fuel, and recent relatively low natural gas prices have spurred more use of natural gas. Henry Hub spot prices have averaged $2.89/million British thermal unit (MMBtu) from January 1 through March 25, compared to $5.20/MMBtu last year. In addition to short-term changes, natural gas-fired generation capacity has become more prevalent in the United States, replacing older coal-fired and nuclear generation capacity. Cold temperatures this year have also supported higher demand from houses that heat with electricity. About one-third of U.S. households use electricity as their primary space heating fuel. The largest electricity space heating region is the South, but in many southern states more than half of households rely on electricity for heating.
Growth in power burn over the past 10 years has been particularly strong in the Southeast, which made up 35.6% of U.S. natural gas-fired generation during early 2015. Between January 1 and March 25 of this year, power burn in the Southeast averaged 8.1 billion cubic feet per day (Bcf/d), an increase of almost 2 Bcf/d from 2014, when prices were much higher, contributing to natural gas being less competitive with coal. The Northeast has also seen strong growth over the years, with power generation in the first three months of 2015 averaging 5.2 Bcf/d, an increase of 20% over last year.
In 2012, strong production and a warm winter led to an oversupply of natural gas and low prices. The power sector absorbed the extra natural gas on the market, and 2012 set the record for annual natural gas-fired power generation at 24.9 Bcf/d. The March Short-Term Energy Outlook projects 2015 electric power sector natural gas consumption will approach the 2012 level at 24.1 Bcf/d and will grow slightly in 2016....MUCH MORE
