Natural gas prices have dropped to their lowest levels since September 2012, according to an analysis released today by the U.S Energy Information Administration (EIA).
Since the end of December, both spot and futures prices at the national benchmark, Henry Hub, have hovered around $3 per million BTU. EIA analyst Katie Teller says this reflects strong domestic production and high inventories.
“We saw prices go up in November, but since then they’ve really fallen down,” she says. “I think last year’s polar vortex was still fresh in people’s minds this November.”
Last winter, sustained cold temperatures caused gas prices to spike. By the end of the season inventories were at their lowest levels in 12 years. This year, forecasters with the National Oceanic and Atmospheric Administration are predicting normal weather for the rest of the winter.
Teller says given continued production growth and strong inventories, the EIA expects average gas prices will stay below $4 through much of 2015 and 2016. However regional prices continue to vary widely. For example, despite its proximity to the Marcellus Shale, New England has been paying more– largely due to an increased reliance on natural gas and pipeline constraints.
“The regional prices are very different,” Teller says. “They’re higher in the Northeast because there’s an issue with getting gas from producing areas to consuming areas.”