Natural gas prices will heat up again

A glut of natural gas in the US means prices could well fall in the short term. For next year, though, analysts are pencilling in a mild recovery.

Just two years ago everyone thought that America was running out of gas, says The Economist. But "all that has now changed". America is "drowning" in the stuff, according to natural-gas magnate Robert Hefner.

Recent advances in drilling technology have made gas in shale formations layered sedimentary rock far easier to tap. Drillers can now fan out horizontally, recovering gas from a larger area. Meanwhile, hydraulic fracturing, whereby rock is injected with water and chemicals to release the gas, has developed as a key technique. So potential drilling acreage has jumped sharply and official estimates of American gas reserves have soared. Indeed, according to this summer's estimate by the Potential Gas Committee, there is enough natural gas to supply America for 90 years at current consumption rates.

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