GAS PRICES

Should Price of Gas Continue to Rise in US?

[Name of College]

Should Price of Gas Continue to Rise in US?

Introduction

From the past two years levels of production of natural gas exceeded the requirement for natural gas. This unbalance has made natural gas prices very lower. Nevertheless, gas prices at present are no longer limited to simply demand and supply. According to the Natural Gas Price Outlook a production reason has continued to increase because of blankets secured term in 2009-10 isolated producers of natural gas from decreasing prices for natural gas. IN this connection, many producers of natural gas have been pushed to carry on making inroads yet at a loss due to the demand for the leasing of land. (Incantalupo, 2011)

Although Natural Gas Price Outlook portrays a dissimilar picture for 2011 and 2012 as producer of Natural gas are required to turn more and more sensitive to low prices of natural gas due to less price hedges in the front, the ending of land leases, trimmed capital inflows from foreign investors and growing concerns of an oversupply of natural gas liquids, a byproduct of economic natural gas production (Anderson, 2011). This sensitivity will be increased if valued easing (QE2), as suggested by the Federal Reserve starts to boost demand for natural gas. Natural Gas Price Outlook also notifies that the severity of a change of price dynamics will be affected further if players speculative portion of a sale to a purchasing mindset. Overall, by 2012, natural gas prices should return to a $ 5 - Price range of $ 6 per million BTUs. (Incantalupo, 2011)

In addition to considering the substantial growth in shale production on land, natural gas prices Outlook assesses the problems that may arise due to the variegation of sources of supply reduced. Increased well freeze-offs, the new regulations limiting the drilling of natural gas, and the disappearance of a Canadian or Alaskan pipelines are only three areas of concern. The growing risk for the state to become a main exporter and the substitute of older, less efficient coal plants producing electricity with natural gas production will also create intricacies of the market for the nation's natural gas. This is the present situation of gas in US which determine the prices, however despite being low for a while prices are now raising in a consistent manner (Anderson, 2011). This direct the focus of the researcher on a question that should gas prices continues to rise in U.S or not. In this study, after assessing different factors and demand and supply situation of the gas the study will than conclude by providing logical answer of the question.

Discussion and Analysis

According to the U.S. Energy Information Administration (EIA) of natural gas is down and prices will continue to EIA urges Henry Hub spot price to grow an average of 4.44/MMbtu 5.33/MMbtu in 2010 and 2011. Henry Hub spot price averaged 4.29/MMbtu in March, which amounted to $ 1.03/MMbtu below the average spot price in February, the EIA projects that prices ...