What’s the Reason Natural Gas Prices are So Low?

Why are natural gas prices at historically low prices? According to gas pricing experts, you can sum it up in a single word: Marcellus.

So much natural gas is coming from the Marcellus shale deposit in the U.S. Northeast that costs for utilities are at levels unseen in more than a decade.

Stockpiles in the eastern U.S. are the highest ever for this time of year, Energy Department data show. Gas at Transco Zone 6, which serves New York City, is trading at an average 38 cents above prices at the Henry Hub in Erath, Louisiana, the delivery point for New York futures. If the spread stays there through the year, it would be the narrowest premium since 1999.

The drop in prices underscores how the hydraulic fracturing, or fracking, boom that’s contributing to America’s drive toward energy independence is helping utilities at a time when the nation’s economy is struggling to gather momentum. Output in the Marcellus shale doubled to a record 6.3 billion cubic feet a day in March, equal to about 62 percent of gas demand in the 11 eastern states that stretch from Maine to Maryland, according to U.S. Energy Department data.

“The Marcellus single handedly changed the gas balance in the U.S.,” Fadel Gheit, a senior energy analyst for Oppenheimer & Co. in New York, said in a June 7 interview. “Marcellus shale production is the reason we have low gas prices.”*

And this:

The Marcellus is “having a huge impact on the pipeline infrastructure…It’s not an overstatement to call it a revolution. It’s making natural gas available to markets cheaper than many would have thought.”*

Read the rest of this fascinating article about how the supply of Marcellus Shale gas is changing the energy game in the U.S. by clicking the link below.

*Worcester (MA) Telegram & Gazette/Bloomberg (Jun 21, 2012) – Marcellus gas cuts price premiums to decade lows