New Report Confirms Continued Growth in Demand for Natural Gas

The US Government has just released data that confirm the growing role of natural gas as a source of energy in the US.  The growing role of natural gas is especially important because of its relatively lower production of atmospheric carbon when compared with other fossil fuels (see Penley On Energy and Education).  It is also important as a factor associated with the U.S. becoming increasingly reliant on its own energy sources and more energy independent.

We have seen considerable growth in domestic production of energy, including natural gas. This shift to greater reliance on domestic production of energy is possible because of recent technological developments, including those that have allowed energy companies to extract natural gas from shale in the U.S., using a process called hydraulic fracturing.

The Federal Government’s short-term report, released August 6, indicated a continuing trend upward in the U.S. production of natural gas with production projected to increase another 1% from 2012 to 2013 and 2% between 2012 and 2014.  This modest but continuous increase comes as imports of natural gas have continued to decline over a 5-year period.

Prices for natural gas have risen somewhat, based on average future prices of $3.58 for November 2013, compared with an average of $3.26 in November 2012.  There are many potential reasons for the move upward in prices.  Among the reasons reported were the heat wave in the northeast that increased demand for natural gas during the summer of 2013.

Another factor contributing to the rise in prices is the continued pipeline capacity restrictions.  Despite recent additions to capacity, we are still seeing restrictions that impacting price and pushing it upward.

Demand for energy, including natural gas, is also increasing as a result of the improvement in U.S. economic conditions.   New orders for manufactured durable goods rose 4.2 percent in June, and sales of new single-family homes increased by over 38 percent from June 2012 to June 2013, and 8.3 percent from May 2013 to June 2013.

All these factors are contributing to the U.S. economic boom for natural gas developed here at home and helping to increase the marketplace for this increasingly desirable fossil fuel. The future of U.S. energy independence lies with the growth and development of natural gas as a primary source of energy.

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