Increasing demand in the utility and manufacturing sectors is bringing balance to the U.S. natural gas market and putting an end to the glut that has caused gas prices to remain low, according to a recent article in the Wall Street Journal. “The question isn’t merely if or even when the [natural gas] surfeit eases but how sharp the impact might be on prices,” The Journal reported.
After so many years of cheap fuel, the consequences of sharp and lasting price increases may be particularly jarring to consumers who expected depressed natural gas prices to continue indefinitely, according to the article.
Onshore natural-gas production has declined for four consecutive months, and the number of rigs drilling for gas in North America recently touched an all-time low. There are now 81 rigs in operation, compared to the record high of 1,606 set eight years ago, the article states.
The sustained low prices have also attracted huge amounts of new demand to natural gas, according to The Journal. The massive U.S. power generation sector is now using one unit of natural gas for each 1.4 units of coal, and natural gas is expected to surpass coal as the fuel of choice later this year. Two decades ago, power generators were using 4.5 units of coal for each one unit of natural gas. “U.S. power producers consumed a seasonal record amount of gas in June, up 9 percent from a year earlier,” The Journal wrote.
To read the Wall Street Journal article, click here.
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