ICF Consulting forecasts US natural gas prices will fall during next several years
By OGJ editors
WASHINGTON, DC, July 13 -- Natural gas prices will fall from recent high levels during the next several years, and sulfur dioxide (SO2) allowance prices will continue to escalate, according to a study released by ICF Consulting Group Inc., Washington, DC.
ICF Consulting's US Fuel and Emissions Market Outlook 2004 provides an integrated analysis of electric power, coal, natural gas, and emission allowance fundamentals in what the firm calls "rapidly converging markets."
Power companies are struggling to adjust their fuel procurement costs and capacity expansion strategies to respond to what many analysts conclude is a permanent high-cost environment.
"ICF Consulting sees a very different future for fuel and SO2 emission allowance markets," said John Blaney, director of ICF Consulting's Environment and Fuel Practice. "As markets have more time to respond to the rapid rise in prices, supply and demand forces will drive natural gas and coal prices lower."
Natural gas markets
The study concludes that gas prices will fall steadily in the long term because recent drilling and exploration will bring new gas to the market and because LNG imports will be expanded.
"The turning point for gas markets was actually set in motion in 2003, when drilling investment turned upward and companies pushed to permit LNG regasification facilities," said Nate Collamer, an ICF Consulting principal.
"Strong economic and power sector demand growth are likely to keep prices high in the very near term, but added production and falling oil prices will push prices down as early as 2005," Collamer said.