An Overview of the Natural Gas Market
Natural gas is a major energy source for the United States; about 25% of energy used in the United States came from natural gas in 2009. It is used to produce steel, glass, paper, clothing, brick, electricity and as an essential raw material for many common products. Some products that use natural gas as a raw material are: paints, fertilizer, plastics, antifreeze, dyes, photographic film, medicines, and explosives. Slightly more than half of the homes in the United States use natural gas as their main heating fuel. Homes also use natural gas to fuel stoves, water heaters, clothes dryers, and other household appliances.
Consumption of natural gas by economic sector is the electric power sector (6.9 Tcf or 33%), industrial sector (6.1 Tcf or 29.2%), residential sector (4.8 Tcf or 23%), and the commercial sector (3.1 Tcf or 14.8%) as of 2009.
Natural gas prices are a function of market supply and demand. Due to limited alternatives for natural gas consumption or production in the short run, changes in supply or demand over a short period often result in large price movements to bring supply and demand back into balance.