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What hath markets wrought ?

September 17, 2012

One of the big stories of 2012 is natural gas prices. They have declined over the course of the past year and the shock waves continue to reverberate throughout the economy.

Late in 2011, Canada’s National Energy Board released a long term energy price forecast to year 2035. It predicted gradually rising natural gas prices from $4.00 /MMBtu in 2010 to $8.00 in a base case or $6.40 in a low case. Instead of $4.25 natural gas, as expected by Fall 2012, it’s $2.83/MMBtu (Henry Hub). Multi-stage hydraulic fracturing technology (fracking) and horizontal drilling techniques have meant that previously untapped shale and tight natural gas resources have been developed.

Consider a few of the many impacts of now much cheaper natural gas: