America’s natural gas boom drives down prices
U.S. natural-gas production has increased more than 50% since 1997, and prices have dropped to levels not seen since then.
Why it matters: Natural gas prices are more opaque than gasoline prices you see driving down the street, but the fuel is actually more diverse and used in everything from home heating to electricity to industrial manufacturing.
- Unlike domestic gasoline prices that are driven mostly by a complex global oil market, natural gas isn’t (yet) priced on a global market. That means America’s increased production has resulted in lower prices, providing economic benefits across the board.
One level deeper: America is ramping up its exports of natural gas in a liquified form (known as LNG), in response to the gas boom over the last decade.
"U.S. [natural] gas prices are something of an island in the world, and remain so despite large-volume LNG exports ramping up.”— Kevin Book, managing director, ClearView Energy Partners
What's next: As of 2017, U.S. had 4% share of global LNG exports. The International Energy Agency says in a new report that's poised to grow to 20% by 2023. That’s a “very very big jump in such a short period of time,” Fatih Birol, the executive director of the agency, told Axios Monday.
Birol predicts natural gas could likely to be priced on a global level like oil within the next decade. That could make America’s natural gas prices beholden to global markets much like gasoline prices are today.