Natural Gas Prices In 2010

Natural Gas Powers Texasdiscrepancy in gas prices from country to country,
According to the US Dept. of Energy, Texasfrom continent to continent, because of a lack of
produces and consumes more electricity than anyadequate transportation the means of shipping to
other state. Over half of Texas energy comes fromtake gas from where its found in abundance to
natural gas-powered generation plants. Texaswhere its needed.
produces 25% of the nations natural gas and is theAs a regional commodity now, present US domestic
largest producer; storing and supplying natural gas vianatural gas prices are somewhat insulated versus
pipeline for all regions of the country. Yet whileshocks from international problems. New shale
Texas has large reserves of low grade coal, most ofdeposits being drilled throughout the lower 48 states
what is burned in its coal-fired plants is brought in viaprovide a more stable supply and stable pricing. As a
train from Wyoming and Montana.result, LNG imports to the US are dropping,
So, it makes sense for Texas electric powerprompting the United Nations International Energy
generators to rely more on the supply of natural gasAgencys chief economist, Fatih Birol, to forecast a
in our back yard rather than waiting for the nextworld-wide natural gas glut continuing through 2015.
10,000 tons of coal to roll in from Wyoming. NaturalIn an interview with Bloomberg News, energy
gas burns cleaner than coal and does not leavecommodities analyst Stephen Schork painted this
behind large amounts of cinder and ash that requirepicture of the current natural gas supply: We have
proper disposal.more gas than we know what to do with in the U.S.;
In the past, natural gas was usually uncovered whenwe have more waterborne gas floating around the
drilling for oil. Many middle eastern oil companiesworlds oceans that doesnt have a home.
commonly used natural gas to push oil out fromWhen natural gas prices began their slide, many
deposits in the earth and then let the gas burn offnatural gas companies capped their wells and cut their
(called flaring). This was because there was neitherproduction. The EIA recently reported in its Short
large local demand for natural gas, nor a way toTerm Energy Outlook:
safely transport it overseas to markets that wantedTotal marketed natural gas production is estimated
it.to have increased by 3.7 percent in 2009, despite a
In Texas, the practice was very different. Natural59-percent decline in the working natural gas rig
gas and oil have been twin commodities that helpedcount from September 2008 to July 2009.
build Texas. Natural gas pipelines stretch in allEven Qatar announced it will not pursue any new
directions from Texas and it has long been useddevelopment in its North field reserve for another
throughout the US for heat, light, and electricalfour years.
generation. So, its little wonder that in this country itsRight now, the two big drivers of US consumption
price has long been bound to oil, a commodity in aare its winter and its economy. This winter, an early
very volatile market where prices are often shapedcold snap increased heating demands for much of the
by world events. For this reason, power generatingcountry and even caused a brief $1 price increase.
companies have paid more for natural gas than coal,Though faltering, the US economy has improved
nuclear, and wind. Because it is the most expensivesomewhat since September, 2008. Because of the
and so heavily relied upon, the price of natural gasslight contraction in productivity and the early cold
determines the price of electricity.weather, natural gas prices have risen from their
When the Wave BrokeSeptember, 2009 low but they are still 50% lower
Throughout 2007 and into 2008, petroleum andthan their peak in 2008. The EIA statistic for the
natural gas prices rose due to a popular tide ofJanuary 27, 2010 price at the Henry Hub in New York
speculative investment. This drove resource($5.42 mmBTU) is 14% higher than the same date
development and innovation in natural gaslast year ($4.75).
technologies to bring gas reserves to market. AmongThe big new for 2010 is its still a natural gas buyers
these:market. With storage levels still at 5 year highs,
The growing Liquified Natural Gas (LNG) trade isenhanced domestic production capabilities, and slow
expected to increase at 6.7 percent per year untilconsumption growth, prices are not expected to rise
2020. New fleets of inexpensively built ships anddramatically through 2010. EIA projects that the
refineries expanded the industry worldwide. LNG nownatural gas spot price at the Henry Hub will increase
involves 15 exporting countries and 17 importingto an average of $5.25 mmBTU in 2010, which is
countries, including the US.$1.27 more than the 2009 average of $3.98 mmBTU.
Qatar announced its goal to develop both itsRemember, this is an average price; seasonal
Northfield natural gas reserve production (fromincreases will occur, especially during the summer
roughly 54 billion cubic feet in 1995 to 2.7 trillion cubiccooling months in Texas when power demand is at
feet in 2008) and its Gas-to-Liquids capacity. Qatar isits height.
now the worlds largest LNG exporter.For Texas electricity consumers, this means that
Developments in horizontal drilling and rock fracturingenergy prices will remain low through for the rest of
techniques with high pressure water providethe year, though there will be some fluctuation due
lower-cost access to several huge deposits of naturalto seasonal demand, as stated. However, one thing
gas trapped in common shale. These include theabout the near future is certain: consumption of
Marcellus shale bed and the Barnett shale in Texasnatural gas will increase as economic conditions
(much of it under Ft. Worth) which has beenimprove. Businesses will need more people as they
estimated at holding 26 trillion cubic feet of naturalwill get back to running equipment and machinery and
gas and is producing 2 billion cubic feet per day.they will all use more energy. As consumption rises,
In July, 2008, the petroleum/natural gas price wavemore generators will burn natural gas to meet that
peaked. Gasoline surged to over $4.00 per gallon andneed. Natural gas prices will rise. And so will the price
natural gas prices to $13.69 per billion BTU (mmBTU).of Texas electricity.
The cost of Texas electricity exploded.Long Term Solutions for the Texas Energy
Inundated with high fuel prices, consumers all acrossConsumer
America cut their travel and their energy use. In theThe best thing an electricity consumer in Texas has
fall of 2008, the economy contracted so severelyright now is energy choice. If you sign on to a two
that businesses laid off workers or closed. Theyyear (24 month) plan now, you can lock in the
stopped using natural gas to heat their buildings andcurrent 2010 rate through 2012. Switching between
stopped needing electricity to power their machinery.now and spring when rates are low could save you
This helped drive down the price of oil, gasoline, andhundreds of dollars over the next two years. Why?
natural gas. But in the case of natural gas, the bigBecause you can take advantage of a long term
developments in LNG supply and natural gas shalefixed energy plan that locks in the current low
brought enormous amounts of natural gas out of theenergy price. In the near future, the EIA projects
ground. Ready to use, it now lay idle in pipelines,that prices will increase in 2011, averaging $6.00
tanks, and ships at sea. With plenty of supply but nommBTU as the existing surplus shrinks in the face of
demand, the price sank further.a rebounding economy. Thats a 13% increase in price.
One year after the price peak, the DOEs EIARight now, if your energy plan is locked in at .114
reported in its weekly natural gas storage report forcent/kWh for 1500 kWh per month, youre paying
August, 14, 2009:about $171/month. But in 2011 given a 13% average
Working gas in storage was 3,204 Billion cubic feetincrease, your bill could jump to $193.23/month. Thats
(Bcf) as of Friday, August 14, 2009, according to EIAa difference of $22.23/month or $266.76 for the
estimates Stocks were 562 Bcf higher than last yearyear.
at this time and 513 Bcf above the 5-year averageTo maximize your savings for these next two years,
of 2,691 Bcf.you need to act before mid-April because thats
By September, 2009, natural gas lost over 80% ofwhen the price begins its annual increase for summer
its July 2008 value and had plummeted to $2.409 percooling costs. To find a long term plan that will help
mmBTU. Texas electric rates fell as well.you save the most money, go to Bounce Energy and
Big Supply + Little Demand = Low Pricecheck out their Price Protector 24 plan. Qualified
Because of booming US domestic supply, natural gascustomers will receive movie tickets, bill credits,
price tumble has decoupled it from oils price. Ascompanion airline tickets, price reductions and more
analyst Fadel Gheit put it, [O]il is a global commodity;for paying their bill on-time!
gas is a regional commodity. You can have a huge