Preface

The analysis in this report was undertaken at the request of the Secretary of Energy, Spencer Abraham. The principal purpose of this study is to examine recent trends and prospects for the future of the U.S. natural gas market. Natural gas prices rose dramatically in 2000 and have remained high through the first part of 2001, raising concerns about the future of natural gas prices and the potential for natural gas to fuel the growth of the U.S. economy. Exacerbating those concerns are the current low levels of natural gas supply stocks in storage and the prospect that a higher than normal rate of injection will be needed in the off-peak (non-heating) season to restore storage to normal levels—which could lead to a continuation of elevated prices in 2001 and 2002. The central questions addressed in this report are "Why have natural gas prices risen so high and so quickly?" and " What is the outlook for the U.S. natural gas market in the short and mid-term?"

This report was prepared by staff from the Office of Integrated Analysis and Forecasting, the Office of Oil and Gas, and the Office of Energy Markets and End Use in the Energy Information Administration (EIA). General questions about the report may be directed to Mary J. Hutzler (mhutzler@eia.doe.gov, 202/586-2222), Director, Office of Integrated Analysis and Forecasting, and Andy S. Kydes (akydes@eia.doe.gov, 202/586-2222), Senior Advisor and Project Leader.

Specific questions about the analysis should be directed to the following EIA staff: