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Natural Gas: Weather A 'Wild-Card' Pricing Factor

Paul Partyka |

WASHINGTON — While total natural-gas consumption is slightly up from last month’s forecast, prices are holding steady, and next year’s prices have been revised down a bit, according to the latest U.S. Energy Information Administration (EIA) short-term energy outlook.
EIA expects total, marketed natural-gas production to increase by 1.2% in 2010. However, this may be offset by the latest hurricane forecast. Tropical storm activity and the accompanying production outages are expected to be significantly higher this year than last year, says the National Oceanic and Atmospheric Administration (NOAA).
Despite the weather threat, sustained, low natural-gas prices are expected to continue this summer. EIA expects the Henry Hub natural-gas spot prices to average $4.49 per million Btu this year, a $0.54 increase over the 2009 average. EIA expects the Henry Hub spot price to average $5.06 in 2011, down $0.28 from last month’s outlook.
EIA projects that retail sales of electricity to the residential sector from April through September will grow by 5% compared with the same period last year. Total consumption of electricity across all sectors is projected to grow by 3.1% during 2010 and by 0.9% next year.
Estimated residential electricity prices during the first quarter of this year averaged 10.8 cents per kilowatt-hour (kWh), down from 11.2 cents during the same period last year. Expect residential electricity prices to average 11.6 cents per kWh in 2010 and 11.9 cents per kWh in 2011, according to EIA.
Lastly, if you plan on driving more this summer, you may be catching a bit of a break. EIA forecasts that regular-grade motor gasoline retail prices will average $2.79 per gallon during the summer, down considerably ($0.15) from last month’s outlook, primarily as a result of the lower crude-oil-price forecast.

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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