The price of natural gas is plummeting at a pace that even the experts caught off guard. A 35 percent collapse of the futures price last year was a boon to homeowners who use natural gas for heat and devices and manufacturers to power their plants and chemicals and materials to do. The land is flat with natural gas as a result of new drilling techniques have enabled energy companies to invest huge resources that range from not so long ago were tapping. The country’s gas surplus has grown, even as the country burns out amounts.
This warm winter weather slowed the growth in demand, however, and created an abundance. In the Northeast, December was the fourth warmest in the past 117 years. Winter supplies are 17 percent above their five-year average.
Natural gas futures prices fell 13 percent last week to $ 2.67 per thousand cubic meters. That is the lowest level in winter-time ten years.
“The market is flooded with gas,” said Anthony Yuen, a commodities analyst at Citibank.
He and other analysts expect the price to average around $ 3 for all of 2012. If the weather stays mild, the price may even dip below $ 2, a level not seen since 2002.
Cheap gas is especially good for the economy:
GAS 2
AP
Chart shows natural gas prices
- More than half of U.S. households use natural gas for heat, and fourth of the electricity needs of the country is made of. Falling heating and electric costs are offset by the impact of high gasoline prices and the possibility of families and small businesses to spend on other things. Residential gas and electric customers save approximately $ 200 per year, according to a study by Navigant Consulting.
- For companies that plastics, fertilizers and other chemicals derived from natural gas, falling prices are nothing less than a windfall. The same goes for the makers of products from steel to stone beer. All use many of their natural gas for heating furnaces. U.S. manufacturers are becoming more globally competitive because of cheap natural gas in the country, industry officials say.
Some industries are not welcome, though.
With electricity prices fall, the profits of all electrical energy producers – whether they rely on coal, nuclear and wind – are shrinking.
Companies drilling for natural gas only earn less these days, too. That is what is asked instead to hunt for oil, whose price is near $ 100 a barrel.
Yet drillers not to reduce the production of natural gas as much as they were during earlier periods of low prices. They have found ways to produce the fuel at much lower cost, so they can be profitable at much lower prices. And in many cases, natural gas is a byproduct of oil drilling that is so profitable that companies are going after every barrel they can find.
Analysts say in some oil and gas fields, gas drillers would be to give away and still very profitable just from selling the oil.
The advantage of falling gas prices for homeowners is not as big as a significant drop in oil and gasoline prices would offer. The average annual household gas bill is about $ 4,000, about double the average annual gas and electricity bills.
source:abcnews
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