Even with their air conditioners at full blast, some consumers
might eventually be in for a surprise: relief on their energy bills.
The price of natural gas has fallen about 50 percent since
hurricane Katrina drove up prices last fall. As oil prices hover
around $70 a barrel, analysts say the spot price of natural gas now
equals the energy potential of oil worth $41 a barrel - a
differential that is spurring businesses and utilities to start
switching over to the less costly fuel.
They are finding many eager sellers. Storage is at such high
levels that some producers will either have to further reduce their
prices orcurtail production. The high inventory volumes might also
auger lower prices this winter, when natural-gas usage reaches its
"If we have no hurricanes in the Gulf and say the summer is not
particularly brutal, we'll go into the winter heating season with
some relief," says Neil Gamson, who follows energy prices at the
Energy Information Administration, the US government's official
energy price forecaster.
Mild winter temperatures caused gas prices to fall while supplies
increased as newly drilled wells in the West started production.
After Katrina, the average price of natural gas topped out at close
to $12 per thousand cubic feet, according to the EIA. Tuesday, the
spot price hit $6.69 on the futures market.
The price break on natural gas occurs as a key House committee
has fashioned a bill that would allow each coastal state to decide
whether to permit natural gas drilling on the adjacent Outer
The US Minerals Management Service (MMS) estimates 420 trillion
cubic feet of gas lies offshore - enough to supply the US with 14 to
16 years of gas at current usage levels. "The numbers we're using
are very conservative," says Chris Tucker, a spokesman for Rep. John
Peterson (R) of Pennsylvania, a co-sponsor of the legislation.
The planned expansion of liquefied natural gas (LNG) imports
could also augment supplies. LNG is natural gas cooled into liquid
form for transport in specially designed tanker ships.
Last week, the Federal Energy Regulatory Commission (FERC)
approved the application for three new LNG terminals and additions
to two others. The new facilities come at a time when imports of LNG
are picking up in the US.
"People are expecting this to be a record year for LNG imports,"
says Dave Shin, chief economist at the American Gas Association
(AGA) in Washington. …