Increased production of natural gas has driven prices to their lowest in the last decade, with the average annual price dropping about 9 percent from 2010 to 20 11, according to the U.S. Energy Information Administration.
The average annual price of natural gas fell from $4.37 per million British thermal units in 2010 to $3.98 in 2011 — the lowest annual average since 2002 – a result of a mild winter and ramped up shale gas production in the Eagle Ford and Marcellus Shales, the EIA said.
Gas futures contracts fell from $4.65 at the beginning of the year to $2.99 on Dec. 30.
“All the weakness we have seen in price over the last four years is very clearly related to the increase in volumes of domestic gas,” said Bob Gillon, director of energy company research for IHS. Gillon noted that production has increased steadily since 2005,with nearly 8 percent growth in 2011.
Export demand for petroleum products helped keep an upward pressure on crude oil and petroleum products, both of which produced double-digit price growth in 2011. Crude oil rose about 15 percent and petroleum product prices rose about 10 percent, with crude oil prices at more than $100 per barrel by the end of the year.
Gillon believes it will be years before increases in natural gas production affect the price of oil in the United States.
“There just aren’t all that many easy substitutions you can make for refined oil products,” Gillon said. “There is not a big market and there won’t be for natural gas as a transportation tool.”
The EIA also reported a decline in electricity prices of more than 20 percent across the United States, with on-peak, day-ahead prices following the decline in the price of natural gas, a major generation fuel.
CNG, for the economy, for the environment, for our national security, and for our children’s future.
So where are all the evil speculators? Aren’t they missing an opportunity to bid up the price of NG like some say they do for gasoline? Or could it be that supply & demand actually rules, over the long haul?
There’s hard work being done to export US natural gas by way of LNG. How will that help national security?