Magazine article Economic Trends

Natural Gas

Magazine article Economic Trends

Natural Gas

Article excerpt

As the winter heating season draws nearer, many consumers are worried about natural gas supplies and prices. By August, prices had already surpassed the most recent price spikes of December 2000 and February 2003. Although increased imports seem to have some ability to help meet demand, this potential is likely to be limited, at least in the upcoming heating season, because of short-run capacity constraints. In 2004, net imports met only about 15% of U.S. demand for natural gas. About 85% of imports come from Canada; most of the rest is from Trinidad (11%) and Algeria (3%).

A key question is how quickly Gulf of Mexico production, which normally accounts for about 20% of U.S. total production, can be brought back on line. Hurricane Katrina, which made landfall on August 29, caused a huge spike in lost or "shut-in" production. More than half of the loss had returned within two to three weeks. …

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