The People of America's Oil and Natural Gas Indusry

Natural Gas Keeps Delivering for U.S. Consumers

Mark Green

Mark Green
Posted January 17, 2017

Abundant, affordable natural gas is providing significant benefits to American consumers. That’s the takeaway from a couple of new U.S. Energy Information Administration (EIA) reports.

First, EIA says U.S. natural gas prices last year were at their lowest level in nearly two decades:

natgas_prices

Here we see natural gas spot prices in 2016 averaged $2.49 per million British thermal units (MMBtu) at the national benchmark Henry Hub. It’s the lowest annual average since 1999. EIA says this reflects warmer-than-usual temperatures most of the year and changing demand. It’s also about available supply – the result of America’s energy renaissance.

Natural gas figures prominently in EIA’s second report as well – that average wholesale electricity prices at major U.S. trading hubs in the first quarter of 2016 were much lower than the same period in 2015:

wholesale_elec_prices

EIA reports that natural gas costs to electricity generators averaged $2.78 per (MMBtu) during the first 10 months of 2016 (latest available data), which was 17 percent lower than the average for the same period in 2015. EIA says the low cost of natural gas helped increase its use in power generation. The amount of electricity generation fueled by gas between January and October 2016 was 6 percent higher than generation over the same months in 2015. EIA’s chart:

elec_by_source

EIA:

Natural gas was the primary source of U.S. electricity generation (when measured on an annual basis) in 2016 for the first time. … Natural gas was the leading source of electricity for nearly every month of 2016, accounting for an estimated 34 percent of total annual utility-scale power generation, compared with a 30 percent share for coal-fired generation.

These reports are significant in a couple of ways. Lower natural gas prices obviously benefit consumers, and they also benefit when costs are lower for the leading fuel for electricity generation. In addition, our air is cleaner because cleaner-burning natural gas has reduced carbon emissions from the power sector to 25-year lows.

Future U.S. energy policy should recognize these natural gas benefits and others – including lower costs for manufacturers and export opportunities – by fostering more domestic natural gas production. We need policies and regulatory approaches that support safe and responsible energy development without needlessly hindering it. API President and CEO Jack Gerard:

“We must reexamine the regulatory onslaught of the last few years that has proposed or imposed some 145 regulations and other executive actions on our industry and instead work to implement smart energy regulations that are focused on the consumer, help to grow our economy, protect workers and continue to improve the environment. It is our view that regulations that do not align with those basic and commonsense goals should be reexamined, revised or removed to make way for smarter and forward-looking energy policies.”

This is the path to responsible energy development, including increased production of natural gas, that will continue to benefit consumers while expanding the economy and improving our environment.


ABOUT THE AUTHOR

Mark Green joins API after spending 16 years as national editorial writer in the Washington Bureau of The Oklahoman newspaper. In all, he has been a reporter and editor for more than 30 years, including six years as sports editor at The Washington Times. He lives in Occoquan, Virginia, with his wife Pamela. Mark graduated from the University of Oklahoma with a degree in journalism and earned a masters in journalism and public affairs at American University. He's currently working on a masters in history at George Mason University, where he also teaches as an adjunct professor in the Communication Department.