Posted on 04/23/2013 1:55:28 PM PDT by thackney
Cold temperatures, a shortage of storage facilities and cutbacks in natural gas drilling are all helping push the price of natural gas well above $4, according to an Ernst &Young analysis released Tuesday morning.
The increase comes after natural gas prices plunged to the lowest in more than a decade in 2012, as production outpaced domestic demand, creating a glut of natural gas.
A year ago, the futures contract for next-month delivery was $1.975. On Tuesday, the contract closed at $4.238 in New York Mercantile Exchange trading.
Consumers are beginning to absorb this excess supply, both for heat during unseasonably cold weather and through a shift toward natural gas for power generation.
The price is growing as debate continues over whether the U.S. should export more natural gas and how that might affect prices for domestic consumers.
“US natural gas prices are still very low compared to global markets,” said Marcela Donadio, Americas Oil and Gas Leader for Ernst & Young’s Global Oil and Gas Center in a written statement. “The shale boom has created a new reality of abundant US natural gas. Taking full advantage of this increased supply will require access to the global market in the form of LNG exports.”
As needed pipeline infrastructure comes online in the next five years, there will also be opportunities to benefit from regional price differences by shipping natural gas domestically, according to Ernst & Young.
Gas is much too low, economically.
The low price was a fluke due to extra production and wells drilled to hold acreage.
Guess now that Chavez is pushing up the daisies, the Kennedys can’t get anymore of that low price gas.
Well, this is natural gas, so I doubt any came from Venezuala.
Nobody is drilling for dry gas.
I am retired from the oil and gas industry, but I seen to remember the Henry Hub spot price hitting $15/MMBTU in December of 2005. Those were the days.
There was a boom in drilling and rush to lock up land.
Unfortunately, there was little infrastructure in place to move the gas away from the shale areas.
That is starting to change.
We will see an up/down in prices as drilling continues and infrastructure expands for the next 10-20 years.
By that time, CNG will be widely available and we may see a real competitor for gasoline and diesel.
Of course, with the expanded oil production and refining capacity, gasoline and diesel should drop in price.
Much of this hinges on who is elected in 2016.
He said Saddam was likely to invade the Kuwaiti corn fields...
1.big additions in production result in much greater supply
which
2. results in lower price
which
3. results in lower demand for more production
which
4. results in less production
which
5. results in rise in price
and then you
6. go back to 1.
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