The price of natural gas in the United States is falling because supply has increased sharply and the expansion of infrastructure to export excess natural gas is slowing.
Diana Furchtgott-Roth, director of the Center for Energy, Climate and Environment and Herbert and Joyce Morgan Fellow for Energy and Environmental Policy at the Heritage Foundation, said this in an exclusive interview with Rigzone today, adding that “natural gas production hit a record high in December” and that “the market was still saturated in the spring.”
“Nationally, this summer’s storms knocked out power to some consumers and gas was not used for normal air conditioning,” Furchtgott-Roth told Rigzone.
“Over the long term, subsidies for wind and solar farms have distorted the energy market, and companies are not applying to build new large baseload power plants that run on natural gas – even though it would be the most cost-effective form of energy for consumers and America needs more baseload power,” the Heritage Foundation representative continued.
Furchtgott-Roth told Rigzone that “US natural gas … could be exported,” but noted that “pipeline and export terminal approvals are being deliberately delayed by the Biden-Harris administration so that natural gas cannot be exported to countries that want to buy it.”
“Over the past decade, America has transformed from a natural gas importer to a natural gas exporter thanks to innovative technology,” added Furchtgott-Roth.
“Our pipeline infrastructure must keep pace with this permanent new reality so that we can export some of our vast LNG supplies and help our allies facing high prices,” the Heritage Foundation representative continued.
“We also need to build more natural gas-fired power plants for baseload to ensure a reliable, stable and affordable electricity supply for consumers and producers,” Furchtgott-Roth continued.
Rigzone has reached out to the White House for comment on Furchtgott-Roth’s statement. At the time of writing, the White House has not responded to Rigzone’s request for comment.
Frederick J. Lawrence, former chief economist of the Independent Petroleum Association of America (IPAA), told Rigzone in another exclusive interview today that the decline in natural gas prices in the U.S. was primarily due to the release of natural gas storage data by the U.S. Energy Information Administration (EIA), but added that “there are also some international factors to consider.”
“The US Environmental Protection Agency’s weekly report shows an increase of 35 billion cubic feet (bcf), which exceeds estimates,” he said.
“Natural gas inventories are at 369 bcf, which is above the five-year average. In addition, we saw some pessimistic indicators across the pond earlier this week as EU inventories remain robust and supply fears have eased since Ukraine invaded Russia,” he added.
In another exclusive interview, Art Hogan, chief market strategist at B. Riley Wealth, said the EIA’s weekly report on natural gas storage “came in above estimates.”
“There have been other macroeconomic pressures over the past two months as well. Natural gas has fallen about 34 percent since its June 11 peak,” he added.
“The concern lies in a combination of the weaker US dollar, a supply and demand imbalance and the absence of extreme weather disruptions,” he continued.
Ellen R. Wald, president of Transversal Consulting, told Rigzone in another exclusive interview that today’s decline in natural gas futures reflects seasonal changes and the expectation of cooler fall weather in the future.
Natural gas prices at the Henry Hub were $3.129 per million British thermal units (MMBtu) at the close on June 11, $2.235 per MMBtu on August 19, $2.198 per MMBtu on August 20, and $2.177 per MMBtu on August 21. At the time of writing, the price is quoted at $2.04 per MMBtu.
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