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According to data just released by the EIA, natural gas production in the U.S. reached an annual record high of 26.85 trillion cubic feet in 2010. That output was an increase of 3.22% above the previous record high last year, which pushed U.S. production in 2009 above Russia's, and made the U.S. the #1 producer of natural gas in the world.
On a monthly basis, natural gas production in December surged to 2.386 trillion cubic feet, which was almost 9% above the year-ago level, and set a new all-time record for the most gas ever produced in a single month (see chart below):
The record high level of production in 2o1o and record monthly output in December helped drive the average residential gas price for the month of December down to $9.86 per 1,000 cubic feet, the lowest monthly average since February 2004, almost 7 years ago (data here), see graph below:

The U.S. is inundated in natural gas, and the glut may not ease any time soon. Domestic production last year hit its highest level in almost 40 years, and 2011 will likely see another year of strong production. That means another year of subdued electricity prices and pressure on drillers' bottom lines as well as a powerful incentive for companies and other consumers to switch to the heating fuel.

With no way to export large quantities of gas and a drilling boom fueled by easy availability of credit and widespread international interest in U.S. gas assets, the glut is seen continuing through 2011.

"Rising production will once again overwhelm demand, leading to yet another year of low prices," Credit Suisse analyst Stefan Revielle said in a research note.

In its latest outlook, the EIA saw U.S. production increasing by 0.8% this year, while deliveries to consumers are expected to rise by 0.3%. For consumers, that means cheaper electricity prices and inexpensive gas for heating and cooking in homes and businesses."

At the same time that oil and gasoline prices in the U.S. are surging due to political unrest in the Middle East, prices for residential natural gas in the U.S. are falling to 7-year lows. Maybe one of the lessons here is that by opening up our domestic energy reserves to drilling for natural gas and oil, we get the multiple benefits of: a) reduced dependence on foreign oil, b) less exposure to what will likely be ongoing turmoil in the oil-rich Middle East, and c) lower energy prices.
Source: U.S. Is Inundated With Natural Gas, Had Record Output in 2010