Considerable progress in rebalancing the gas market

22 Mar 2013 by Jim Fickett.

Yesterday the Energy Information Administration of the US Department of Energy gave a nice summary (not a permalink) of progress made in 2012 bringing the US gas market back into balance.

On the supply side, drilling was down significantly:

The result of less drilling is that production from shale seems to be leveling off, or at least growing much more slowly:

On the demand side, power plants are using more gas and less coal:

With production decelerating and power plant use growing, the market is back into balance in one important sense – the gas in storage, measured in months of supply, is right about at its long-term average:

(In this graph, both demand and storage figures are averaged over a moving 12-month window to get rid of seasonal effects.)

As a result, gas prices have recovered considerably:

It is not clear that the price is yet high enough for exploration and production companies to make a decent profit, but very considerable progress has been made.