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Lower Economic Expectations Fuel Natural Gas Price Projections

Paul Partyka |

WASHINGTON — As fall nears, laundry owners may be looking at slightly lower-than-expected costs for natural gas, according to the most recent U.S. Energy Information Administration (EIA) Short-Term Energy Outlook.
The government projections reflect updated expectations for economic activity, with forecasted U.S. real gross domestic product (GDP) growth of 2.8% in 2010 and 2.3% in 2011, down from the previous growth projections of 3.1% and 2.7%, respectively.
The Henry Hub natural gas spot price averaged $4.32 per million Btu (MMBtu) in August, $0.31 MMBtu lower than the average spot price in July. EIA expects prices will fall below $4 per MMBtu in September and October before rebounding with the onset of colder weather.
The projected Henry Hub natural gas spot price averages $4.54 MMBtu for 2010, a $.60-per-MMBtu increase over the 2009 average, but down $0.15 per MMBtu from the forecast in last month’s EIA Outlook. EIA also expects the Henry Hub spot price to average $4.76 per MMBtu in 2011, down $0.22 per MMBtu from last month’s Outlook.
Despite a 4.2% increase in total consumption of electricity during the first half of the year, the average U.S. resident price was down slightly during 2010 compared with the first half of 2009 in response to lower fuel costs for generating power.
The largest price declines occurred in New England (-7.7%) and the West South Central region (-5.3%). In contrast, prices in the Middle Atlantic region were up 6.2% during the first half of the year as some of the price caps in Pennsylvania began to expire. Generation fuel costs have increased this year, which is expected to boost U.S. residential electricity prices by about 2.1% in the second half of 2010 compared with the same period last year, and by 2.4% during 2011.
EIA expects regular-grade gasoline prices, which averaged $2.35 per gallon last year, to average $2.69 per gallon over the second half of 2010, down 7 cents per gallon from the average for the first half of the year.

About the author

Paul Partyka

American Coin-Op

Paul Partyka was editor of American Coin-Op from 1997 through May 2011.

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