Natural gas distribution forecast
March 13, 2014 | By
Barbara Vergetis Lundin
The shale gas boom resulted in a surplus of natural gas in the United States, which triggered a collapse of natural gas prices when combined with a shortage of export facilities. However, despite this, infrastructure investments will give export capacity a boost, and consumption will gradually increase as the economy recovers in the five years to 2019, according to IBISWorld. "Since 2009, natural gas's importance to the economy has grown, with manufacturers and electricity utilities relying more on natural gas as an energy source," said David Yang, IBISWorld industry inalyst. "While demand stagnated during the recession, it steadily recovered as industrial production increased." The natural gas distribution industry has recovered well over the past two years, with gas prices rising as production slows. Revenue grew 17.2 percent in 2013 and IBISWorld forecasts revenue to grow 2.2 percent in 2014. Profitability has increased over the past five years, largely because citygate prices fell at a faster rate than retail prices, according to the research, and industry operators have benefited from low citygate prices, which represent gas purchase prices for distributors. Capital expenses have moderated because many infrastructure projects are already under construction due to investments immediately following the recession. Natural gas consumption is expected to climb at an average annual rate of 2.1 percent over the five years to 2014; however, consumption growth has been unable to offset sharp declines in prices, according to the Energy Information Administration. For the five years up to 2019, IBISWorld projects natural gas production growth to slow, while infrastructure investments will boost export capacity. Upstream gas extractors will be able to charge higher prices on export markets, and regulatory agencies will set higher retail rates as production decelerates. Over the next five years, IBISWorld forecasts that U.S. natural gas prices, consumption and industry will increase as the economy recovers. For more: © 2014 FierceMarkets, a division of Questex Media Group LLC. All rights reserved. http://www.fierceenergy.com/story/natural-gas-distribution-forecast/2014-03-13 |