Natural Gas Use Is Falling

In response to sharply higher prices, federal energy analysts project that total U.S. demand for natural gas will fall by 0.8% this year, then rebound by 2.8% in 2006, assuming a return to normal weather and a recovery in consumption by the industrial sector.

In its November outlook, the Energy Information Administration estimates that industrial demand will decline by more than 8% in 2005 as a result of the significant increase in prices for natural gas as a fuel or feedstock. In 2006, the key end-use sector is expected to bounce back somewhat, and industrial demand is projected to increase by 6.8%. EIA says the anticipated rebound in industrial gas demand rests in part on the assumed reactivation of damaged plants in the Gulf of Mexico region.

Domestic natural gas production is expected to be down by 4.2% this year, in large part because of the major disruptions to infrastructure in the Gulf from Hurricanes Katrina and Rita, before rising by 4.7% in 2006. Total liquefied natural gas imports for 2005 are expected to remain flat at about 650 billion cu ft but are projected to average slightly above 1,000 billion cu ft in 2006.