Natural gas prices for future delivery fell below $3 per million British thermal units for the first time since 2012, as record production and a mild winter has allowed inventories to accumulate.
The low prices means Americans will likely be paying less to heat their homes this year.
U.S. natural gas production hit a record 30 trillion cubic feet this year, as prolific shale regions such as the Marcellus in Pennsylvania and West Virginia saw big gains in energy output. Also, natural gas utilities have tried to stockpile supplies after last winter’s freez saw volatile price swings, especially when demand soared during the “polar vortex” in January.
But the winter weather so far has been mild. That has reduced demand and kept inventories stocked.
Inventories received a record injection between April and November, but the balmy winter has yielded less of a drawdown than anticipated. Inventories stood at 32.4 trillion cubic feet, the federal U.S. Energy Information Administration said Wednesday.
Sustained low prices could push more power plants to burn natural gas instead of coal, which could help reduce carbon emissions from energy sources. After declining 12 percent between 2005 and 2012, carbon emissons grew 2 percent last year largely because natural gas prices rose to about $4 per million Btu.
