North American prices have been rel

North American prices have been relatively low, and northwest European prices in between.17
North American
natural gas markets are highly competitive, with many buyers and sellers. They have seen
considerable production growth in recent years; according to EIA, U.S. dry natural gas production
rose 20.0 percent between 2005 and 2010. Henry Hub spot prices are the reference prices for the
North American market. Prices at Henry Hub have been modest by global standards since the
financial crisis of 2008-09.18
North American spending is strongly associated with natural gas development, and natural gas
prices, which were $4.24 per Million British Thermal Units (“MMBTU”), as of December 2013.
Prices averaged $3.73 per MMBTU for 2013 overall. Projected prices average $3.89 per in 2014 and
$4.11 per MMBTU in 2015. Factors influencing oil and natural gas prices during the period include
hydrocarbon inventory levels, realized and expected economic growth, realized and expected levels
of hydrocarbon demand, levels of spare production capacity within the OPEC countries, weather,
and geopolitical uncertainty.19
U.S. spot natural gas prices are forecast to average $3.88/MMBTU in
2014, up 7.0 percent from 2013, as demand slowly grows, production growth remains restrained,
and the U.S. gas market slowly tightens.20
According to the EIA, natural gas consumption in the United States averaged a 70.9 billion cubic feet
per day (“bcf/d”) in 2013, an increase of 1.7 percent from 2012. EIA also projects that natural gas
consumption will fall by 2.2 percent in 2014 because of the forecast 4.6 percent decline in heating
degree days and lower natural gas use by the electric power sector. The natural gas consumption is
expected to increase by 1.4 bcf/d in 2015 with growth in use by the industrial and electric power
sectors. The projected year-over-year increases in natural gas prices contribute to declines in
natural gas used for electric power generation from 24.9 bcf/d in 2012 to 22.3 bcf/d in 2013 and
21.7 bcf/d in 2014. However, EIA expects natural gas consumption in the power sector to increase
to 22.6 bcf/d as retirements of coal power plants rise in 2015 in response to the implementation of
the “Mercury and Air Toxic Standards.”21
The figure below depicts U.S. gas consumption in bcf/d.