Natural gas imports and exports and their effect on the U.S. energy market

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For those of you watching the natural gas markets (and you should be as they remain important to both retail gas and power prices), there continues to be a stubborn resistance to the idea that prices should be higher than a year ago. You might ask - isn't there enough shale gas out there to keep NYMEX gas futures below $3.00 per MMBtu? There isn't one answer; rather, it’s the “death by a thousand cuts” scenario. Some of our previous blog posts have covered long-term impacts of potential liquefied natural gas (LNG) exports that should start later this decade. But, what about the present?

One key change to U.S. supply-demand has been the impact of imports and exports. While supply has been unquestionably strong due to the shale gas boom, there has been a significant decline in net imports simultaneously.

From 2007 to 2012, imports via pipelines (mostly Canada) and LNG declined by 32% from 12.62 Bcf/day to 8.59 Bcf/day. Compounding this change is surprising growth in exports to Mexico as their economy strengthens without access to sufficient natural gas supply. Exports to our southern neighbor have more than doubled since 2007 from 0.8 Bcf/day to 1.69 Bcf/day. When you combine the U.S’ declining imports with the increasing exports, a loss of 4.92 Bcf/day of natural gas occurs or 7% of U.S. supply!

This scenario is one of many bullish factors that offset the shale phenomenon that keeps natural gas prices low, but not quite as low as some would like.

Click here for more information on exports to Mexico.

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