Natural Gas Glut Only Temporary

Today's Washington Post fronted a story in the business section about a possible glut in the U.S. market for natural gas, but as we noted more than a week ago, long-term trends are headed in the other direction:

Most energy analysts, however, see the bulge in natural gas supplies as temporary. "We have a little bit of a reprieve, but I don't think it's a sustainable reprieve," said John Dearborn, vice president for global energy at Dow Chemical Co., a major natural gas user. "We have been able to build up inventories faster than in years prior, but that's no indication of where gas inventories are going to end up. If we have a warm summer and a normal-to-cold winter, we will find ourselves back in the position we were in last winter."

Most players in futures markets agree. Prices for natural gas to be delivered in January stand at $11.10 a thousand cubic feet, what Dearborn calls "the danger area" for consumers like Dow Chemical.

Most oil and gas companies and natural-gas-producing countries are going ahead with plans to meet demand that they expect to rise quickly over the next five to 15 years. In the United States, Sieminski noted, consumption of natural gas is expected to rise by about 30 percent by 2020. Since domestic natural gas production is essentially flat, most of the supply needed to meet that demand is expected to come from abroad in the form of LNG.

Pat Cleary has some thoughts on the subject too.

Technorati tags: Energy, Electricity, Natural Gas

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