Energy needs will increase and downstream demand will pick up, aiding industry growth
Los Angeles, CA (PRWEB) May 30, 2012
The Natural Gas Distribution industry has been leaking during 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, in turn, causing energy costs per customer to decline. 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 Antonio Danova. Also, state utility regulators prevented many distributors from increasing customer pricing because the cost of delivering natural gas has declined over the five years to 2012. 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, Danova says. Additionally, industrial producers were still active during the recession, supplying goods to emerging economies. While these firms used less energy because of declining domestic demand, emerging economies' demand kept these customers in business and using energy to produce goods. As electricity-generation firms and industrial producers desired increasing volumes of natural gas during the past year, industry revenue is expected to grow at an estimated rate of 4.6% from 2011 to 2012.
Keeping with the current growth trend, the next five years are set to be bright for the industry. As the economy gains steam, energy needs will rise 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 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. For more information, visit IBISWorld’s Natural Gas Distribution in the US industry report page.
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IBISWorld industry Report Key Topics
Most industry firms 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 that others operate.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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