Updated Jun 27, 2018

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.

Note: Henry Hub natural gas spot price is shown in 2017 dollars; Data: Energy Information Administration; Chart: Chris Canipe/Axios

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.

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The decade that blew up energy predictions

Illustration: Andrew Witherspoon / Axios

America’s energy sources, like booming oil and crumbling coal, have defied projections and historical precedents over the last decade.

Why it matters: It shows how change can happen rapidly and unexpectedly, even in an industry known to move gradually and predictably. With a new decade upon us, let’s look back at the last one’s biggest, most surprising energy changes.

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What Middle East crisis? Why oil prices aren't rising

Data: EIA; Chart: Axios Visuals

Despite rising unrest in the Middle East — including the death of an Iranian commander — America’s average gasoline prices have remained under $3 a gallon.

Why it matters: Practically speaking, it’s great for drivers’ pocketbooks — and President Trump’s re-election campaign. It also shows the remarkable cushion created by the United States' booming oil production, which has doubled over the last decade.

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Gas prices in the U.S. are stable, despite the unfolding crisis with Iran. Dan and Axios energy reporter Amy Harder discuss if this is the new normal.

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