Natural Gas Keeps Delivering For U.S. Consumers

on January 25, 2017 at 10:00 AM

Texas Oil Companies Work To Adapt To Falling Oil Prices

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:


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:


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:



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.

By Mark Green 

Originally posted January 17 2017

Energy Tomorrow is brought to you by the American Petroleum Institute (API), which is the only national trade association that represents all aspects of America’s oil and natural gas industry. Our more than 500 corporate members, from the largest major oil company to the smallest of independents, come from all segments of the industry. They are producers, refiners, suppliers, pipeline operators and marine transporters, as well as service and supply companies that support all segments of the industry.