Natural Gas Going Forward

There's a nice story in the Wall Street Journal about natural gas today.

Natural gas is the second worse performing commodity this past year, mostly due to producers showing no restraint. But they have little choice. It is estimated that about two-thirds of leases have "produce or lose clauses" and those leases expire if wells not drilled.

Producers are starting to show restraint, according to the story, but if there is to be a turnaround in the price of natural gas it will be due to electric utilities using more natural gas. That has already begun as federal regulations make it more costly to use coal.

In 2000, coal accounted for 52 percent of fuel for electric utilities, and natural gas accounted for 16 percent.

Currently, the numbers are about 45 percent for coal and 24 percent for natural gas.