July 8, 2013
Article Analysis In economics, consumption trends explain the relationship between supply and demand. These trends are studied to define spending habits and patterns of the consumer. All goods and/or services with goods being defined as “all things that are moveable at the time of identification to a contract for sale” (U.C.C. Article 2-Sales ND) used by the consumer are dictated by supply and demand. This following information will examine the consumption patterns of natural gas as it relates to the supply and demand of said good.
Natural gas consumption for creating power is on the rise, and usage of natural gas for electric power has surpassed natural gas consumption “in the industrial sector since early 2009. The power sector added a substantial amount of new natural gas fired generating capacity over the last decade, much of which was in the form of efficient combined-cycle units” (EIA.GOV, 2012, p.1). In years past, while coal-fired generation was low-cost, the natural gas-fired combined-cycle units were used at lower rates. In the manufacturing sector, natural gas use soared in 2010 and 2011, reversing a trend of decreasing use that lasted from “the mid-1990s to 2009. Natural gas is used in the manufacturing sector and industrial sub-sector for process heating, steam generation, onsite electricity generation, space heating, and petrochemical processing” (EIA.GOV, 2012, p.3). The downward trend in natural gas prices has reduced the cost of vital input for many commercial ventures. Because short-term flexibility to take quick advantage of low natural gas costs is limited to this category, many of these enterprises that relied so much on natural gas as fuel closed down or went global in the late 1990s and early 2000s because of growing natural gas costs. For many noticeable reasons, many of the industries decided to switch fuel to natural gas, and others may never switch regardless of fuel prices, leaving many others dependent on natural gas prices.
Global and macroeconomic actions affect industrial motion often tracked by industrial signs. “However, some U.S. manufacturers (e.g. petrochemicals) that use natural gas derived feedstock’s (e.g. ethane) are enjoying a competitive advantage while international competitors consume more expensive, oil-derived feedstock’s” (EIA.GOV, 2012, p.6). The natural gas and electricity industries moved into a progressively codependent relationship as coal-fueled electricity gives way to natural gas-fired generation. Natural gas has become the leading fuel used to serve growing progress in electricity demand, basically because of historical low costs. As gas usage for both power and non-power has grown, its convenience of interruptible capacity has declined, particularly during periods of peak-gas demand.
In the last decade the world’s oil market has