Natural Gas Distribution in the US Industry Market Research Report Now Available from IBISWorld

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Despite declining demand from most downstream customers, electricity generators and industrial production firms have kept the Natural Gas Distribution industry from experiencing more significant revenue declines. As the recession and discovery of natural gas in Appalachia dropped natural gas prices, electricity generation firms used natural gas at an accelerating rate as an input to generation. Additionally, industrial producers were still active during the recession, supplying goods to emerging economies. Over the next five years, regulatory issues and technological advances will make natural gas an increasingly attractive option. For this reason, industry research firm IBISWorld has added a report on the Natural Gas Distribution industry to its growing industry report collection.

IBISWorld Market Research

IBISWorld Market Research

Demand from industrial firms has offset declining residential and commercial demand

The Natural Gas Distribution industry has been leaking over the past five years. Drops in demand from downstream customers have been responsible for most of the decline. First, the recession caused households and businesses to reduce spending and, in turn, energy costs per customer declined. Furthermore, “recent discoveries of natural gas in the Appalachian Basin have kept natural-gas prices down in light of the high future supply that is anticipated,” says IBISWorld industry analyst Justin Molavi. Also, state utility regulators prevented many distributors from increasing customer pricing because the cost of delivering natural gas has declined over the past five years. As a result of these adverse conditions, industry revenue is expected to decrease at an average annual rate of 2.2% to $127.6 billion in the five years to 2012.

Despite declining demand from most downstream customers, electricity generators and industrial production firms have kept the Natural Gas Distribution industry from experiencing more significant revenue declines. As the recession and discovery of natural gas in Appalachia lowered natural-gas prices, electricity-generation firms used natural gas as an input at an accelerating rate. Additionally, industrial producers were still active during the recession, supplying goods to emerging economies. Although these firms were using less energy because of declining domestic demand, emerging economies' demand kept these customers in business and using energy to produce goods, says Molavi.

As the economy gains steam in the coming years, energy needs will increase and downstream customers will purchase natural gas at increasing rates. In particular, industrial production firms and electricity generators will provide the industry with large increases in business as the demand for electricity and industrial products grows significantly. Also, increased carbon dioxide (CO2) regulation is expected in the United States, which will push electricity generation away from coal and toward natural gas because it uses half the CO2. The industry’s low concentration reflects the local community-based nature of natural gas distribution. Although there has been some merger activity in the industry and the areas supplied have tended to increase as a result, natural gas distributors generally confine their activities to particular regions. For example, major company Sempra Energy operates Southern California Gas Company (based out of Los Angeles) and San Diego Gas & Electric. Other industry players include Atmos Energy Corporation, Pacific Gas & Electric Company, NiSource Inc. and AGL Resources. For more information, visit IBISWorld’s Natural Gas Distribution report in the US industry page.

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IBISWorld industry Report Key Topics

Most firms in this industry operate gas-distribution systems consisting primarily of gas mains and meters that transport gas to end consumers. Some firms are gas marketers that buy gas from the well and sell it to a distribution system, while others are gas brokers or agents that arrange for gas to be sold via distribution systems others operate.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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Gavin Smith
IBISWorld
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