The price of natural gas has dropped below $2 for the first time in more than a decade.
A mild winter and a boom in production have left the United States with more natural gas than Americans can consume. Storage facilities are quickly filling up. The glut has pushed down the futures price of gas 59 percent since it peaked at $4.85 last summer.
Wednesday, the futures price passed a milestone. Gas dipped below $2 to end the day at $1.984 per 1,000 cubic feet. The last time it went below $2 was Jan. 28, 2002, when it hit $1.91.
Cheaper gas had already lowered heating bills over the winter, and air-conditioning costs are expected to fall this summer because many utilities generate electricity with natural gas. Major American manufacturers -- including chemical companies, fertilizer plants, and makers of aluminum and steel -- also should benefit as energy costs tumble.
"If you're a consumer, this is great news," independent petroleum analyst Stephen Schork said. "This could spark a real rebirth of American manufacturing."
Supplies of gas are high because improved drilling techniques have allowed companies to produce more from vast, gas-rich layers of underground rock. Homeowners also have been using less natural gas for heating, thanks to a mild winter.
Practically speaking, a one-day drop below $2 won't make much difference for consumers or the economy. But the ongoing slump in gas prices certainly will. Commodities traders also said that Wednesday's drop is an important indicator of how bloated the natural gas market has become. Natural gas supplies are 61 percent higher than the five-year average.
While consumers enjoy cheaper prices, producers will find it harder to turn a profit. Some have tried to slow production, but so far, prices have continued to fall amid mild winter weather. Shares of natural gas producers Chesapeake and EQT Corp. fell by more than 3 percent, and Energen Corp. dropped more than 2 percent in afternoon trading.