U.S. Natural Gas Demand for 2005:
US Residential --> 4,838 (22%)
US Commercial -->3,057 (14%)
US Industrial --> 6,608 (30%)
US Electric Power --> 5,797 (26%)
US Other --> 1,650 (8%)
Total US Demand --> 21,950 (100%)
----------------------------------------------------------------------------------------------------
The DEMAND for Natural Gas is mainly driven by the following factors:
- Weather
- Demographics
- Economic Growth
- Fuel Competition
- Storage
- Exports
*Natural gas demand can be seasonal + often fluctuates with THE WEATHER. Usually the demand for natural gas peaks during the colder months of the year (November-March)...if the summer season is extremely hot, it can also result in greater cooling demands, which in turn may also result in increased summer demand for natural gas.
*Changing demographics also affects the demand for natural gas, especially for core residential customers. In the US for instance, recent demographic trends indicate an increased population movement to the Southern and Western states. These areas are generally characterized by warmer weather, thus we could expect a decrease in demand for heating in the winter, but an increase in demand for cooling in the summer.
*Natural gas storage levels have a significant impact on the commodity’s price. When the storage levels are low, a signal is being sent to the market indicating that there is a smaller supply cushion and prices will be rising. On the other hand, when storage levels are high, this sends a signal to the market that there is greater supply flexibility and prices will tend to drop.
*Check out the following GRAPH demonstrating the above-mentioned correlation between natural gas prices vs. natural gas storage levels (its a shame the graph only goes back to 2000)...there seems to be a definite inverse relationship between the two...the "high storage + high price" combination in late 2005 can be attributed to Hurricanes Katrina and Rita which materially disrupted Gulf Cost production and SPIKED prices...lastly, for reference's sake, the price of natural gas today is $9.80/BTU):
http://upload.wikimedia.org/wikipedia/en/3/35/UndergroundGasStorage_9.JPG
Data Courtesy: Wikipedia.com, snagged on 3/28/08.
Posts
