Natural Gas Prices In The US Fall 80% To A 6.5 Year Low

With all of the attention recently on falling oil and gasoline prices, there hasn’t been much attention on falling natural gas prices, which recently fell to levels not seen since early March of 2002, more than 6.5 years ago! Since the most recent peak in late June, natural gas prices have fallen by almost 80% (see chart above).

Bottom Line: Because of the significant decline in natural gas prices, we can expect lower electricity prices, and lower home heating costs this winter, and in fact it’s already happening. From a USA Today story:

Here’s a bright spot in an ailing economy: Electricity prices are falling in many areas.

The sharp drop in natural gas prices and, to a lesser extent, oil prices is slashing electric rates across big swaths of the USA. Utilities in the Northeast, Texas, Florida, the Mid-Atlantic and California rely heavily on natural-gas-fired power plants to generate electricity.

Natural gas prices have plummeted as the anemic economy has dampened consumption. Also, natural gas resources jumped this year as producers found ways to unearth fresh supplies embedded in shale rock.

Update: The prices in the chart are for “Natural Gas Wellhead Price West Texas (US$/MCF)” from Global Financial Data. In the interest of parsimony, I left off “West Texas” from the title of the original graph for this post, but have now added it in response to the first comment.

Posted in Categories: Commodities, Contributor, External Research, USA.

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