US natural gas prices have hovered around the $4 per million British thermal units (mbtu) mark for the past few years now. They've slipped back in recent months summer demand for air conditioning was lower than usual, while supply grew by 4% compared to last year, as producers pumped out more gas.
But in the long-term, expect prices to rise. Hydraulic fracturing (fracking') technology has made it possible to extract gas from once-inaccessible rock formations, giving supplies a huge boost. But demand should gradually catch up.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
It is the cleanest-burning fossil fuel, and today's low prices should encourage households and industries to switch to it, spurred partly by more stringent environmental regulations. There is a growing market for natural gas-powered vehicles, which currently account for around 1% of cars in the US.
There is also plenty of scope for the US to export more natural gas to parts of the world where gas is more expensive. Capital Economics reckons prices will have risen to $6 per mbtu by the end of 2016.
-
Millions at risk of 'unnecessary' tax bill – how to shield your savingsMillions of Brits could be taxed on their savings interest this year as their savings interest exceeds the personal savings allowance. Are you at risk?
-
Savers will have to wait as long as 48 years to build a £1m cash ISA pot if allowance is cutChancellor Rachel Reeves is rumoured to be planning a cut to the cash ISA allowance in the Autumn Budget, making it harder for savers to build wealth. Will you still be able to build a £1 million cash ISA pot?
