The natural gas price is like a knuckleball. You can see it coming in, but there is so much movement on it, you can't tell where it is going. Prices are too good to be true, and that creates a whole new ball game for the U.S. gas industry. In 1995, the Federal Reserve Bank of Dallas announced that the oil and gas industries had achieved efficiencies that would enable them to thrive when crude oil was at $17/Bbl and natural gas sold at $1.70/MMBtu. Today, as the spot wellhead price of gas continues at much higher levels, more CAPEX money becomes available among producers. The combination of accelerated decline rates in most gas fields and a lack of capital spending due to low gas prices has contributed to flat overall domestic production, especially over the last 18 months. However, now that gas prices are up significantly, projects that have been on hold for the past several years are now being revived as producers try to take advantage of the revenue potential.
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