Natural Gas Markets in 2006
LIBRARY OF CONGRESS WASHINGTON DC CONGRESSIONAL RESEARCH SERVICE
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The Energy Information Administration EIA in its Short Term Energy and Winter Fuels Outlook STEWFO provided good news for residential natural gas consumers. EIA projected that natural gas winter home heating costs might decline by as much as 13 from last years record-setting levels, even though consumption is expected to increase this winter. The STEWFO sees prices for natural gas lower than last year as a result of weak market fundamentals. Analyses of natural gas market demand and supply conditions seem to be consistent with the EIA STEWFO. Aggregate consumption of natural gas over the first seven months of 2006 has declined compared to 2005. U.S. production, as well as imports, have also declined over the same time period, likely in response to the decrease in consumption. On a sectoral level, the decline in consumption has included all consumer groups except electric power generators, whose consumption rose. Storage of natural gas, the factor that balances yearly demand and supply, is at an all time record high level, and is approaching the maximum physical capacity of the system. There does not appear to be any fundamental imbalance between demand and supply in the 2006 natural gas market, making a stable, or even declining, price level likely.
- Economics and Cost Analysis