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Natural Gas Futures Price Nears 10-Year Low

http://www.eia.gov/naturalgas/weekly/archive/2012/01_19/index.cfm

Natural gas prices on the New York Mercantile Exchange (NYMEX) settled at $2.488 per million British Thermal Units (MMBtu) on Tuesday, January 17. A near-month contract has not ended daily trading that low since March 5, 2002, nearly 10 years ago. Prices dropped again, slightly, the following day, settling at $2.472 per MMBtu on Wednesday. Near-month contract prices fell below $3 per MMBtu during August and September 2009, but recent drops are particularly notable because of the time of year. January is typically a month when natural gas prices are relatively high, the result of increased weather-related demand. Most analysts attribute the current price weakness to a winter that, so far, has been much warmer than normal, combined with abundant production and storage surpluses.

The February NYMEX natural gas contract, during its recent tenure as the near-month contract, has been significantly below February near-month contracts for the last several years (see figure). In addition to the warmer-than-normal winter, temperatures in the coming week are expected to be relatively mild, possibly contributing to further price declines.

U.S. natural gas production and imports

Replies to This Discussion

Permalink Reply by Ann Ticopa on January 20, 2012 at 8:30am

The price did actually hit that 10-year low yesterday (Thursday).

Permalink Reply by Brian Day on January 20, 2012 at 9:25am

One thing about it, anyone paying $3 plus a gallon for gasoline and $4 for deisel cannot ignore the tremendous savings they would be getting if they were burningg natural gas. Those kinds of savings can pay for a lot of natural gas conversions, natural gas vehicles, and natural gas infastructure when demand increases via transportation needs.

Permalink Reply by Ann Ticopa on January 20, 2012 at 11:06am

Depends on how much (and where) one drives. By chance, the 2000 vehicle I bought was dual fuel, gasoline and E85. The last I checked, the closest public E85 fueling station was near Erie. And, unlike the ~$6,500 premium for a CNG-only passenger vehicle, it was an end-of-year rebated vehicle.

Another factor is whether/not a significant amount of gas will be exported as LNG, It's predicted that would raise the domestic price of natural gas Which would, for example, make it less attractive to replace coal power plants with natural gas plants.

Permalink Reply by paleface on January 20, 2012 at 11:30am

There is more and more activity of people switching to natural gas from home oil.There is companys making replacement burner units for your oil burner,you unbolt your burner and pump and bolt these units right up they are made for your oil burner.You have to line your chimney if not done already and two way flue door,if chimney is lined already its around 2k to switch over.

Permalink Reply by Ann Ticopa on January 20, 2012 at 1:22pm

Better yet, just buy a new (gas) furnace with a clean heat exchanger, not one crudded up by high sulfur oil. A standard 80% one is less than $1,000 and a 93%er is about twice that. Don't understand why a chimney that was safe for an oil furnace would have to be lined to use it for a gas furnace?

That leaves the major gotcha ... getting the gas distribution company to extend their pipeline.

Permalink Reply by paleface on January 20, 2012 at 2:38pm

Thats my problem I don't have gas on my street and the gas company wants a percentage of people to change over before they would run a gas line down the street?

Permalink Reply by Ann Ticopa on January 20, 2012 at 4:08pm

The distribution line stops about a mile from my location. I think it may be a case that the existing line doesn't have enough capacity to extend it to new customers. We ran into that problem in an urban area once when we wanted to switch from oil to gas heating. (We did have gas for the kitchen stove and the water heater.)

Permalink Reply by paleface on January 20, 2012 at 4:42pm

Maybe its up to the local gas companys to get there butts in gear and get the gas lines to the houses so we have the option to use gas? What are waiting for the oil and gas companys to pay for it?

Permalink Reply by Brian Day on January 20, 2012 at 6:59pm

We have the same problem in large areas in Wyoming and are forced to use propane, which is expensive. Perhaps the price of propane will drop in years to come.

Permalink Reply by Brian Day on January 20, 2012 at 6:57pm

Being an HVAC contractor, i can comment on a few of those points. By the time all of the other utilities are brought in for the switch to the gas furnace, regardless of the % efficiency, you would have $4,500 to $7,000 in the swap depending on the particular house and location. Converting your oil burner is probably going to be no where near as efficient as the gas furnace replacement. International building code standards, which contractors everywhere usually have to adhere to to satisfy their contractor liability insurance, require that an old oil, coal, or wood flue be lined with at least single wall pipe. This garuntees the integrity of a questionable old flue and the draft characteristics of a modern gas furnace are different than the oil burner. on an additional note, any new gas furnace above %90 efficiency can and must be vented with plastic, PVCC pipe. This is good news because this venting can easily be ran up existing flues, inside existing walls or closets, or directly out of the side wall of a home. the cost increase of a %90 furnace over an %80 furnace is usually not the mitagating factor in which type is installed.

Permalink Reply by paleface on January 20, 2012 at 7:45pm

Brian thanks for helping out here but what do you mean by venting on a furnace thats not the chimney is it?

Permalink Reply by Lynn Wigglesworth on January 21, 2012 at 8:59am

Venting brings fresh air into the furnace; it's vented from outside the house so it doesn't suck all the oxygen out of the room or cause drafts.