The Future Of Natural Gas

The following report will be based on natural gas. Specifically, it will cover the uses of natural gas, factors affecting the supply and demand, costs and benefits of natural gas, the international trade of natural gas, particularly Russian and American imports/exports and finally substitutes to natural gas.

The United States consumes more than 25% of the world’s petroleum products which is a large percentage, considering only 3% of the world’s oil reserves are produced by the United States. Given the demand for petroleum products such as gasoline, understanding why Crude oil prices have skyrocketed in recent years, is not hard. According to the article “Ending America’s Oil Addiction,” the surge in crude oil prices can be reduced in large part to the simple concepts of supply and demand. (Cooper, 2008)

Over the past two years, oil prices have increased very rapidly. “With OPEC production cuts and a growth in crude oil demand,” oil prices went from a 25-year low of $11 per barrel in February 1999 to a peak of close to $36 per barrel in December 2003 (Jablon 1). “Some analyst, however, said the cut could soon push crude prices above the psychologically important threshold of $40 per barrel and worsen the pain for U.S. motorists” (“Rising Prices Fuel Gas Clash” 1). During this winter, the price of natural gas has gone through the roof. This brings many questions to mind. Are the companies just raising prices? Is there actually a shortage that is causing the raise in price?

Some emergent countries have put a lot of effort to find new reservoir or find the best way to recover oil from deep seas such as The pre-salt in Brazil. America has high projections for the future with fracking. However, lower prices would put at risk investments in unconventional sources. For example, tar sands, shale oil, deep sea and fracking. Our forecast is that the crude oil price tend to slowly rise until the market balance it self to avoid oversupply especially because of the weakening in the global oil

As nations search for less carbon intensive forms of energy the demand for gas has grown rapidly worldwide in recent years. This significant increase in demand has led to a boom in world gas prices. In Australia, there are large reserves of unconventional natural gas compared to conventional natural gas. However, according to the Bureau of Resource and Energy Economics (BREE) there is enough conventional natural gas in Australia to supply all of Australia at current levels for more than 6130 years.

It has been suggested that fracking can be brought energy independence for Poland by 2014 instead of depending on the Russian gas and abilities to get enough fuel to last for 300 hundred years (Donald Tuskd, n.d). Fracking can play a significant role for economic gain of a country. Richard Moorman(2012) remarks their project as an energy and economic game changer for Northern Ireland. For a widespread expansion of fracking, It

California has one of the highest gas prices in the United States (Laskoski, usnews.com). However, compared to many developed nations, United States has one of the cheapest gas prices (Hargreaves, CNNMoney.com). Discussion of the reasons gas prices fluctuate is a detailed matter which requires an overview, starting from the extraction of crude oil, chemical processes, regulations, taxes, and gas retail market. The factors that can affect the price at gas station can be categorized into three main categorize including crude commodity prices, technology regulation and taxes, and retail market. As crude oil is the base resource for the production of gasoline (also known as Gas or Petrol, not be confused with Petroleum) its price plays an important

Within the last year, oil prices in the United States have dropped significantly. As oil drilling in the United States has reached its highest level in over 30 years, consumers are reaping the benefits. Among these gains are record-low prices at the pump, and cheaper oil to heat homes. However, oil prices did not just drop on their own; multiple factors contributed to the fall. Increased domestic production, declining global demand, and competition from other oil-producing nations had led to rapidly dropping oil prices across the United States.

Traders work in the crude oil options pit at the New York Mercantile Exchange, April 22, 2008. Oil posted a then-record high of more than $118 following oil demand from China and supply concerns from Russia and Nigeria.When you pump $30 into your tank, that money is broken up into little pieces that get distributed among several entities. Gas is just like any other consumer product: There 's a supply chain and several groups who are responsible for setting the price of the product. The media can sometimes lead you to believe that the price of gas is based solely on the price of crude oil, but there are actually many factors that determine what you pay at the pump. No matter how expensive gas becomes, all of these entities have to get their slice of the pie. According to the U.S. Department of Energy, here 's an approximation of where each dollar you spend on gas goes:

The importance of natural gas is to replace the role of oil in the economy. Natural gas is good for the US because it can produce natural gas domestically. It has plenty of energy for use in people’s homes and in industry. It will help the US economy cope with the depletion of peak oil production. Crude oil is nearly three times as expensive as Natural gas. (Pipeline, 2009-2013)

When it comes to vast amounts of energy sources, natural gas in America is not something most people believe is plentiful. As resources are used up it then becomes time to look for a new supply elsewhere. America has always been dependent on foreign trade, including fuels, which in turn leaves us vulnerable to steep prices.

Recent spike in US and Canada shale gas production have reduced the prices in the region to historical minimum of less than $4/MMBtu, a half of the price for Europe and five times less the price for China or Japan. This difference in prices has raised huge interest to export of LNG from USA to Asian market. Out of country’s total 11 LNG

Asia uses crude oil as a benchmark for natural gas prices and favours long-term contracts. Japan and Korea almost totally dependent on imported LNG. This dependence places a high premium on security of supply and has kept prices in Asia high relative to other regions (Suárez, 2012).

With reserves in 31 states, the US has a supply of natural gas large enough to provide the country with energy for decades (“Gas Drilling: The Story So Far”). Access to these vast deposits is helping to significantly decrease the United States’ reliance on foreign energy, as we have recently become the largest natural gas producer worldwide (“Hydraulic Fracturing Natural Gas and Oil Development”). In addition to abundance, natural gas has several other benefits as well. Natural gas emits only half as much carbon dioxide when burned than coal does, and currently the cost per unit is only one third that of oil, giving it some clear advantages over other widely used fossil fuels (Harvey, Hal). As stated by chairman of BP Capital T. Boone

The on‐going changes described above create challenges for modeling and forecasting global natural gas supply, demand, and pricing. The supply sector is served by the LNG chartering sector, which day by day becomes all the more competitive. LNG carriers have become an integral part of the global energy market. Today, important natural gas discoveries at distance from demand markets, combined with strong natural gas demand in East Asia, is driving investment in the LNG carriers needed to join supply and demand.