Natural Gas Price Outlook Improves Again This Year
The U.S. Energy Information Agency issued an early release version of its 2013 Annual Energy Outlook and the increase in U.S. energy production and the production outlook over recent years continue to keep forecasts of price increases modest. That is especially true for natural gas where long-term price forecasts have fallen by 15% to 30% in just the past three years (chart below).
Of course all sorts of national and international events can interrupt these trends, but the price forecast along with the expectation of a continued, long-term, price differential between oil and natural gas should result in continued fuel switching by electricity generators, and an increase in switching by end users as well. Natural gas is already the majority source for home heating everywhere in the country except the Northeast, but opportunities for fuel switching in the transportation sector are enormous. Unfortunately, with a gasoline station located about every quarter mile, and large industries supporting them, the prospect of consumers being able to fuel their autos at home using the existing natural gas infrastructure and a relatively small investment in equipment for their home doesn’t have the same appeal to everyone as the economic, environmental and consumer rationale of switching implies.