Natural gas prices fell to levels not seen in a decade after a government report showed weak demand and high supplies.
The price of natural gas slid 6.1 percent to $2.32 per 1,000 cubic feet Thursday after the Energy Department said the nation's supplies were 21 percent above the five-year average. It's the lowest price since February of 2002.
Supplies have been growing in recent years as drillers have learned to use a controversial drilling technology called fracking to tap vast reserves of natural gas trapped in shale formations under several states. Extreme weather during the last two summers and winters pushed demand for the fuel higher and kept prices from falling sharply.Now a mild winter across much of the country has crimped demand and created a glut. In the Northeast, December was the fourth warmest in the last 117 years, according to the National Weather Service. Natural gas prices have fallen 23 percent since the beginning of the year. About half of U.S. homes use natural gas for heating, and natural gas is used to generate about a quarter of the nation's electricity. Changes in natural gas prices can take up to a year to trickle to customer bills because of the way gas and electric utilities purchase the fuel. Still, lower natural gas prices of recent years are saving residential customers about $200 per year, according to a study by Navigant Consulting. Low natural gas prices are also a boon to chemical companies that use it as a feedstock and to manufacturers who use it to fire boilers. The price of benchmark U.S. oil ended a little lower on Thursday following a series of reports that pointed to an improving U.S. economy. Jobless claims fell, consumer prices were steady and the dismal home construction market showed more signs of life at the end of 2011.