Energy experts across the world share the belief that natural gas is most likely to displace gasoline in the future, since natural gas is a cleaner and a more efficient fuel than gasoline. Moreover, with oil supplies getting smaller with each passing day, natural gas would perhaps be the only option left for meeting all energy needs. Not surprising, natural gas today is experiencing rising popularity in the US, Asia and Europe. Another crucial factor that is driving the popularity of natural gas is the concern that oil supplies are getting exhausted very fast.

simple supply and demand model dictates natural gas prices. As supplies become scarce and demand picks up, the price of natural gas increases. Consequently, natural gas price treads an extremely tight balance between supply and demand in its endeavor to meet increasing demand from homeowners, businesses, factories, schools and power-generation plants. Today, natural gas meets about one-fourth of the total energy needs of the US, and is considered the backbone of the manufacturing, steel, glass, chemicals, automobiles, food and industrial sectors.

The wholesale price of natural gas in the US during the 1990s was about $2 per thousand cubic feet (Mcf). This price, according to the U.S. Energy Information Administration, is predicted to reach $9 per Mcf during the current 2005-2006 winter seasons.

Natural gas prices seem to be affected the most by weather conditions. This sensitivity to weather is evident during winters, when people tend to use more gas for generating heat. During summers there is an increased demand for cooling, which translates to a higher demand for electricity to power air-conditioning units.

Analysts who have observed the trends in natural gas prices in recent years are of the opinion that natural gas as a fuel option is a disaster waiting to happen. The analysis is not without reason. It is now clear, from recent happenings that a few months of inclement weather can result in severe shortages and skyrocketing prices. And worst, there is little supply side solution.

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