To start the new year, the natural gas spot price is at the lowest level seen during the previous seven years. This downward trend started at the end of last year in December and is presumably driven by the new supplies of natural gas being produced from shale.
On January 5, 2011, the Henry Hub natural gas spot price was $4.52 per million British thermal units(mmBtu), which was 33 cents, or 7.9 percent, higher than the price of $4.19 last Wednesday. This Wednesday's price of $4.52 was 30 percent lower than the price of $6.47 per mmBtu on the first Wednesday in January 2010.
The amount of natural gas in storage in the East Region had decreased 4.9 percent to 1,590 billion cubic feet for the week ending December 31, which was 23 billion cubic feet below the five-year average. Nebraska is a part of the East Region (see map) which is a major natural gas consumer, particularly in the residential and commercial sectors. The industrial sector, which includes agriculture, is also a major consumer in this state. Most of the gas is supplied from the Producing Region with a fair amount imported from Canada. The Henry Hub in southern Louisiana is a major market center with interconnections for many of the pipelines that transport U.S.-produced gas to the East Region. Furthermore, the Henry Hub is the preferred reference point for prices for most of the domestic gas destined for the East. Therefore, market conditions and developments in the East Region and price movements and trends at the Henry Hub are usually highly correlated.
Notes: An archive is available. A forecast of Henry Hub prices to the year 2030 is available in Table 104 on line 635. To obtain the price per hundred cubic feet (ccf) or the approximate price per therm, divide the price by ten (10).
A general rule of thumb: Add three dollars to the Henry Hub spot price to estimate the residential natural gas price. Likewise, add 30 cents if you have already converted the price from British thermal units to ccf or therms.
|Note: NA = Not available.|
Sources: Natural Gas Weekly Update. Energy Information Administration, Washington, DC. Nebraska Energy Office, Lincoln, NE.
This report was updated on January 7, 2011.
Typically, there is one week between updates.