Economy

Stability in natural gas prices a boon for consumers, industry

Natural gas prices, once considered the most volatile of any commodity, could be headed for years or even decades of stability, helping the economy and household budgets.

The fuel formerly rose or fell with crude oil prices, and at one point in early 2008 natural gas and oil cost the same for the same amount of energy produced. But while oil prices have soared, surging domestic supplies of natural gas have kept its price in check. It’s actually cheaper than a year ago and, based on energy value, less than one-third the price of crude oil right now.

That’s great news for industries that rely heavily on natural gas, from fertilizer and petrochemicals to steel, and for consumers, who could get a break on winter heating bills.

The federal Energy Information Agency is expecting only a modest price increase in 2012 for natural gas. And the federal agency and others, including Overland Park engineering firm Black & Veatch, are projecting relatively stable prices for the next couple of decades.

That’s a sharp contrast to recent years when natural gas prices at times tripled the current price of $4.55 per 1,000 cubic feet.

“The idea of $14 or $15 gas, that just doesn’t fit anymore,” said James Williams, an analyst for WTRG Economics, which tracks and analyzes energy prices. “There’s just too much gas.”

The U.S. not too many years ago expected to be importing growing amounts of natural gas. But thanks to advances in retrieving the trillions of cubic feet of natural gas locked in underground shale formations, the country now is sitting on natural gas reserves sufficient to meet more than 100 years of current demand.

Unlocking the gas does have its critics and environmental costs. It requires drilling into rock and then injecting pressurized water and chemicals to recover the fuel. The process requires large amounts of water, leaves tons of debris behind and is suspected of polluting groundwater. If not answered sufficiently, those concerns could curb the potential of shale gas.

But others are also pointing out the benefits of having ample supplies of a domestic fuel. Natural gas is the main home heating fuel, and stable prices helped hold down last year’s winter heating bills and should do so again this winter. That will be especially welcome for households that have been paying more for gasoline — until the recent price break, an extra $100 a month on average.

Read the full story at SacBee.com

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