AGA Study Notes Positive Supply Situation

April 2011 Vol. 238 No. 4

The American Gas Association’s latest study, “The Positive Natural Gas Supply Situation Benefits Consumers – A Look at January 2011,” finds that customers are greatly benefitting from the sustained, stable production of domestic natural gas. According to the report, consumer bills would be 40-70% higher today had natural gas prices in a supply-constrained 2006 persisted.

“The market uncertainty we’re seeing due to the turmoil in the Middle East has caused crude oil prices to soar, but natural gas prices continue to remain relatively low and stable, even with the sustained cold we have seen this winter season,” said Dave McCurdy, president and CEO of AGA.

The study compares today’s natural gas supply and pricing situation to the wake of hurricanes Katrina and Rita: “In the winter of 2005-2006, natural gas customers arguably faced the worst domestic supply situation since the late 1970s,” the study states.

The study emphasizes that improvements in natural gas extraction techniques from shale formations have expanded the long-term supply situation and, paralleling that, the positive outlook for consumer prices: “These technology improvements have helped increase natural gas proved reserves 63% from 1990-2010.”
“We now have estimations that total gas resources can meet current demand levels for at least 100 years,” said McCurdy. “While increased access and supplies have ultimately led to lower customer bills, we must work to ensure that there is an open and collaborative process that allows all segments of the industry to work with key stakeholders and regulators to bring natural gas from shale to market in a transparent and environmentally sound fashion.”

The report anticipates that as long as the nation has continued access to its vast supplies of natural gas, the potential for favorable prices could persist “for many years” to come.