Natural gas prices plunge
Tue, 17 Jan 2012 12:30:00 GMT —
If you're among the 50 percent of Americans who use natural gas to heat your home, good news for you.
There was a 35 percent collapse in the futures pricing for natural gas this past year, but why?
According to Wayne Hughes of Panhandle Producers and Royalty Owners Association, when the economy started to go sour, manufacturing complexes started shutting down or limiting their use of natural gas.
That made them have to cut back on what they were providing to the national pipeline grid, and when you couple that with a string of mild winters, you have a suppressed natural gas price.
"You add all those things together and gas is being kept at an artificially low level as far as our industry is concerned and we'll be there as long as the economy is in the shape it's in."
Hughes says a lack of a significant winter in the upper Midwest is what has caused the major drops we've seen over the last few days.
"Most of the natural gas we sell here into the grid goes for heating in the upper Midwest and since there's not a lot of that needed right now that tends to push the price down."
He says until the economy recovers, we're going to stay where we are as far as natural gas is concerned, but economic factors are a little different here.
"Although the dry gas we take our of the ground doesn't sell any better than anyone else's, there are a lot of liquids that can be stripped out of the gas before it's put into the pipeline and those liquids are very valuable, they sell for the same price per barrel that crude oil does."
As it stands right now, the price per barrel is around $100.
Horizontal drilling is a big reason the Panhandle has experienced a relatively good upturn, especially the eastern Panhandle.
To bring natural gas prices up, Hughes says the economy must make a dramatic comeback, and he says that won't just happen overnight.