A recent article in the Chicago Tribune reported a speech delivered by Alan Greenspan to the House of Representatives Energy & Commerce Committee. In it, he said the era of cheap and abundant natural gas in North America has ended, Canadian reserves can no longer be counted on to cover future increases in consumption, and gas imported from elsewhere will be the only counter to future shortages and drastic price increases. To reinforce the message, the article contained a Bloomberg graphic showing that the price of natural gas futures contracts had increased from about $3.35 to $6.33 per million BTU in the 12 months since June 2002. Worse, the trend showed no signs of leveling off. Elsewhere, I've read about low levels of underground storage and concerns of supply pinches again this winter.
How can this be? Industrial output is down and plants continue to close. Overall, the weather hasn't been exceptionally cold. Where's the gas going?