A Natural Gas Shortage Is Looming For The U.S.
- As natural gas demand around the world breaks new records, U.S. shale producers are struggling to keep up with demand.
- While natural gas prices in the United States fell after a railway strike was averted last week, it looks likely that prices both at home and abroad will spike this winter.
- A hotter-than-expected summer and a lack of alternative energy sources have left U.S. inventories below the seasonal average.
Last week, the media rushed to report that natural gas prices in the United States had fallen sharply after trade unions and railway companies reached a tentative deal that averted a potentially devastating strike.
Indeed, natural gas prices fell by nearly a dollar per million British thermal units, helped by a respectable build in inventories. And yet, inventories remain below the seasonal average, exports are running at record rates, and producers are beginning to struggle to meet demand, both at home and abroad.
Reuters’ John Kemp wrote in a recent column that domestic and international gas consumption had risen to record highs, and shale producers—the ones that account for the bulk of U.S. natural gas output—were having a hard time catching up with this demand.
Meanwhile, although higher on a weekly basis, inventories remained at the second-lowest for this time of the year for the last 12 years, Reuters’ market analyst noted. He also added there were no signs of any improvement in the level of inventories despite the rise in prices.
None of this suggests lower prices for natural gas are coming to either the United States or international markets as the northern hemisphere heads into winter. On the contrary, the latest figures suggest more financial pain for gas consumers. And they confirm, to an extent, forecasts made earlier this year.
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