EIA Forecasts Higher Consumption of Natural gas in the United States Despite Soaring Prices
The U.S energy information administration forecasts higher consumption of natural gas in the United States, despite the soaring prices. Because of the strong market sentiments and strong purchasing appetite for the petrochemical market, the prices of natural gas hyped up in quarter two of 2022. Russian gas supply cuts through the Nord Stream pipeline and had a turnaround at the Freeport LNG plant in the United States.
The consumption of United States Natural gas is projected to rise by 3.6 million cubic feet per day, which would be the highest annual consumption record, according to the September Short-Term Energy Outlook (STEO).
This year, an increase in natural gas consumption was anticipated across all end-user industries in the United States. The electric power sector in the U.S is predicted to grow by 4 percent to 32.1 Bcf/d in 2022, surpassing the previous record by 1 percent. This will be the sector with the highest growth rate among all other sectors.
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The U.S electric power sector uses more natural gas than any other end-use industry. Historically, power providers have switched to coal or any other less expensive fuels for electricity generation especially when natural gas prices are relatively high. Natural gas consumption in the electric power sector has climbed 7 percent in the first eight months of the year 2022 as compared to the previous year 2021, averaging about 33.3 Bcf/d. In the first eight months of 2022, the price of natural gas at the Henry Hub benchmark was USD 6.41 per million British thermal units which was previously USD 3.43/MMBtu in 2021.
The potential of the Coal-fired power plants to boost power generation in 2022 has been constrained, because of low on-site coal supplies. The residential, commercial, and industrial sectors will all see an increase in natural gas use, according to market experts.
The need for space heating in buildings rose because of the recent cold snap, especially in the commercial and residential sectors. Market experts predicted that natural gas consumption will rise in the industrial sector by 0.4 Bcf/d, 0.7 Bcf/d in the commercial sector, and O.9 Bcf/d in the residential sector.
The mid-west and east saw the greatest increases in working gas in the underground storage, respectively. The increase in inventory and associated decline in prices helped in easing the pricing pressure that United States buyers are now experiencing. Prices significantly decreased because of the rail agreement and storage construction which also coincided with a decline in crude oil as well.
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As per Procurement Resources, despite the skyrocketing prices, the US Energy Information Administration predicts increased natural gas usage in the US. In all end-user industries in the United States, a rise in natural gas consumption was projected for this year. In the United States, it is anticipated that the electric power sector would increase by 4% to 32.1 Bcf/d in 2022, breaking the previous record by 1%. Among all other sectors, this one will experience the fastest development. In the first eight months of the year 2022, as compared to the prior year 2021, natural gas consumption in the electric power sector increased by 7%, averaging roughly 33.3 Bcf/d.