New York, NY, United States (AHN) – Natural gas prices have plummeted a whopping 35 percent over the past year, a boon for homeowners, factories and businesses who heat with the fuel.
The United States is rich with natural gas, a result of new drilling techniques that have enabled energy companies to tap vast supplies that were unreachable just a few years ago.
This winter season’s mild weather has slowed the demand for natural gas, adding to the glut in storage.
December in the Northeast was the fourth warmest in 17 years, leaving natural gas winter supplies 17 percent above their five year average.
Natural gas futures fell 13 percent last week, to $2.67 per cubic feet, the lowest winter-time level in 10 years.
Analysts forecast the average price of natural gas to remain near $3 for all of 2012, and if the mild winter weather persists, a dip below $2 is possible.
Cheap natural gas is welcome for the more than half of U.S. households that heat with natural gas. Additionally, companies that make plastics, fertilizers and other chemicals derived from natural gas are reaping a windfall from low natural gas prices.
But not everyone is cheering low natural gas prices. Companies that drill solely for natural gas are earning less.
Natural gas hit nearly $15 in 2005. But over the next few years drillers perfected methods that allowed them to more profitably extract gas trapped in shale formations. Improved drilling methods eventually turned the shortage into an oversupply.
Analysts see low natural gas prices for years to come, and industrial customers are betting on it. But that could change if demand increases or cold snaps are more frequent. Exports of U.S. natural gas could also reduce the glut. And, natural gas drilling could be curtailed by environmental concerns.
But for now, low natural gas prices have hit a warm spot for many in the U.S.