Many people in the natural gas industry are hoping that current low prices have hit rock bottom—and there’s no way but up. That, according to Jim Robinson, Senior Economist with the Economic Analysis Division. He says the price of gas at Wyoming’s Opal Hub is $2.75 per thousand cubic feet (mcf). That’s after an October forecast by the Consensus Estimating Group, or CREG, estimated that gas would sell at $4 mcf.
Robinson says there are three key reasons for the discrepancy.
“Warmer weather, much warmer than anybody anticipated for winter and also an abundance of natural gas supplies--especially due to the Marcellus Shale development back east that’s bringing a lot of gas online,” he says. “We also entered the winter season with a tremendous amount of gas already in inventory.”
Robinson says that the impact of the price-drop is the main reason why members of the Joint Appropriations Committee are trying to either reduce state budgets or keep them from growing.
CREG is forecasting that the state will have $164 million dollars less to spend over the next few years than they previously thought.