U.S. Natural Gas Output Demand to Rise in 2022
The Demand for Natural Gas Production Rises
According to the U.S. Energy Information Administration's Short Term Energy Outlook, U.S. natural gas production and demand will both rise in 2022 as the economy grows. Also included in the report is that the EIA projects that dry gas production will rise to 96.71 billion cubic feet per day (bcfd) in 2022 and 101.71 bcfd in 2023 from a record 93.55 bcfd in 2021.
Another projection mentions that gas consumption would rise from 82.97 in 2021 to 85.73 bcfd in 2022 before sliding to 85.28 bcfd in 2023. That compares with a record 85.29 bcfd in 2019.
The EIA predicts that U.S. coal production would rise to 598 million short tons in 2022 and 605 million short tons in 2023 from 578 million short tons in 2021 as power plants burn more coal due to an expected rise in gas prices. However, also noted was that in 2020, coal output fell to 535 million short tons, its lowest since 1965.
What does this mean for businesses?
Businesses Should Plan Now to Beat Energy Market Volatility
With the energy market so volatile businesses should be looking closely at their energy procurement strategies.
In 2020, we saw a warm winter season paired with with lower demand through the pandemic, which brought us record low NG prices. When 2021 rolled around, prices went up and we saw a good amount of volatility in the energy market. Both years were great years to lock-in a lower rate.
Now that 2022 has come around, demand for energy has sharply risen, but supply has not seen as much as an increase. Coupled with decarbonization efforts and weather impacts on the power grid, and we have the mixings for expensive natural gas and electricity prices. Throw the Ukraine war on top of mix, it's hard to predict if we will see a sustained decrease in prices any time soon.
Is this the new normal?
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