Energy Information Administration: Charting Natural Gas Consumption

Apr. 7.10 | About: iPath DJ-UBS (GAZ)

by Adam Sharp

The EIA just released their latest short-term outlook for energy. The commentary is good, if a bit dry. The charts are better, like the one showing natural gas consumption below.

Look at how consumption jumped in 2000 (peak of the tech bubble) and 2007 (peak of the real estate bubble). I wonder if those kinds of moves could help economists predict bubbles. Even guys like Bernanke, who argue that there is no way to predict or stop bubbles.

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Here's the EIA's commentary on nat gas consumption. As I mentioned, it's a bit dry. So I highlighted some of the more interesting parts:

EIA expects total natural gas consumption to increase by 1.9 percent to 63.8 Bcf/d in 2010 and decline by 0.6 percent in 2011 (Total U.S. Natural Gas Consumption Growth Chart). Total U.S. heating degree-days (HDDs) during the first quarter 2010 were about 0.7 percent higher than last year. However, in the South region, first-quarter HDDs were about 20 percent higher than the same period last year. The cold weather helped boost year-over-year natural gas consumption in the electric power sector, adding to the increase in industrial sector consumption brought about by the improved economic conditions.

In last month's Outlook, EIA revised upward the forecast for natural gas consumption in the electric power sector for this year largely because of the higher space heating demand due to cold weather in the South. This month's Outlook includes another upward revision to the electric power sector consumption forecast. However, this revision reflects EIA's expectation that lower natural gas prices relative to coal prices will increase the utilization of natural-gas-fired generating facilities in the baseload power supply.

EIA's forecast for 2011 includes consumption declines in all sectors except the industrial sector. The projected return to near-normal weather reduces consumption in the residential and commercial sectors, while higher natural gas prices reverse the coal-to-gas switching trend observed in 2009 and forecast to continue in 2010. Consumption in the industrial sector, supported by continued economic growth, is projected to increase by 1.7 percent in 2011.

Here's the latest nat gas price chart. Note that while consumption is expected to fall in 2011, prices are expected to rise overall.

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nat-gas-pricesClick to enlarge

Here's the EIA's commentary on prices:

EIA expects the Henry Hub natural gas spot price to average $4.44 per million Btu (MMBtu) this year, a $0.49-per-MMBtu increase over the 2009 average, but a significant downward revision from the $5.17 per MMBtu projected in last month's Outlook. The price outlook is lower primarily because of an average 2 billion cubic feet per day (Bcf/d) upward revision to the 2010 domestic natural gas production forecast.

You can download the whole report here. If you just want the charts, go here [.PDF].

Disclosure: No positions