Recently, a globalized gas glut has led to lowered prices for gas that heats our food and homes and runs industrial factories throughout the world. This amazing trend comes after a shortage for natural gas in recent years. Darcel L. Hulse attributes this new imbalance among supply and demand to the global recession stating, “We had many years of ever increasing demand so the world geared up for that, but what the world did not prepare for was an economic recession that is global in scope and in impact.” There are six new production plants for natural gas coming on line. However, Asian and European markets, which use the most natural gas, are slowing.
The global capacity for gas exports will increase 25% from 200 million tons. The natural gas exports from Qatar, Egypt, Nigeria and Algeria which were suppose to enter European and Asian markets are now arriving on supertankers in the United States where there is a glut too. Natural gas prices have lowered in the United States as its use has fallen by two-thirds. The new imports will not lower the prices any further but will sustain the prices in the market until it comes out of the recession.
The new influx of natural gas into the United States has caused mixed reactions. Consumers will most definitely benefit from the lower prices. Many industrial products utilize natural gas in the production process to run machines and operate factories. Natural gas also provides one-fifth of the power generated by electric utilities. Proponents for energy independence, are on the other side of the issue, and are in fear that the new imports will ruin domestic production markets for natural gas. The domestic rig count will be cut by fifty percent as the imports increase. Prices for natural gas are down to $4 per thousand cubic feet from $13 only a year ago.
“The United States used to have gas bubbles all by itself; now the world can have a gas bubble,” said Donald Hertzmark. The once highly priced necessity for countries with little alternative energy sources has become abundant and will aide a global movement out of the recession.
Having a natural resource in such abundance is great for consumers and the producers who utilize it production processes. With such a high abundance and a lowered price, investments in renewable energy sources can be more heavily researched and tested. These practices will hopefully lead to greater energy independence and lead to developments of cleaner energy technologies.
-- Michael Fisher
