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Page Outline:

1. Basic Facts
2. Price Breakdown
3. U.S. Natural Gas Prices
4. Factors that Affect Natural Gas Prices
5. Natural Gas Consumption and Reserves
6. What Is Washington Doing?
7. Sources

Basic Facts

• 900 of the next 1000 US power plants will use natural gas.¹
• Natural gas can be found in shale formations, sandstone beds, and coal seams.²
• Natural gas is a “clean” fossil fuel. It releases less than half of the carbon dioxide that coal releases when burned.³

Price Breakdown

According to the US Department of Energy, the price of residential natural gas is determined by two major factors: the cost of distribution and the cost of the commodity. Over the past few years, the commodity cost, the cost of the gas itself, has increased and currently constitutes more than 50% of the total cost of residential natural gas.⁴ The USDE graph below illustrates the recent trends in residential natural gas costs.

Image Source: “Residential Natural Gas”⁵

U.S. Natural Gas Prices

According to US Department of Energy statistics, the average cost of natural gas nationwide has increased from $6.69 per 1000 cubic feet in 1999[ to $13.01 in 2008.⁶ The USDE graph below illustrates the cost of residential natural gas nationwide in 2006.

Image Source: "Residential Natural Gas"⁷

Factors that Affect Natural Gas Prices

Based on US Department of Energy data, residential natural gas prices are heavily influenced by "prolonged cold spells, brief episodes of severe winter weather, disruptions of the pipelines, and problems with other energy supplies, such as a prolonged outage of a nuclear or coal-fired power plant."⁸

When natural gas prices are high, the Department of Energy recommends shopping around for a better price, regularly inspecting your natural gas appliances, and lowering the settings on your thermostat.⁹

Natural Gas Consumption and Reserves

As of 2007, the United States possesses 237,726 billion cubic feet of dry natural gas and 9,143 million barrels of liquid natural gas.¹⁰ To view the amount of U.S. proved dry natural gas reserves since 1920, click here.

In 2007, the United States consumed 23,054,056 million cubic feet of natural gas.¹¹

For a full summary of natural gas prices, consumption, import/export data, etc. visit the Energy Information Administration's "Natural Gas Summary" webpage.

What Is Washington Doing?

Energy Information Administration

One of the EIA's responsiblities is to gather and publish data on natural gas and all other major sources of energy in the United States. Basic information on natural gas usage in the United States can be found on the EIA's "Energy In Brief" Webpage.

Each year, the Energy Information Administration assesses fossil fuel industry data (production/consumption, etc.) and makes assessments regarding future trends. The following link contains the EIA's predictions for 2009 as well as possible trends up to 2030. Link: Annual Energy Outlook 2009 Early Release with Projections to 2030

Congressional Support

According to The New York Times, "Senior Democrats in Congress are getting behind natural gas, portraying it as an alternative fuel for transportation that can serve as a stopgap until renewable sources of energy, like solar and wind power, become economical on a broad scale"¹²

Support From the Obama Administration?

It is likely that the natural gas industry will benefit from the Obama Administration's energy and economic policies considering the fact that President Obama's Chief of Staff, Rahm Emanuel, "introduced legislation [while serving in the House] to offer more tax credits to producers and consumers of natural gas and mandate the installation of natural gas pumps in some service stations.”¹³

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Sources