Many felt the price was inflated but were not sure why, except based on speculation of a cold winter. The price of natural gas had actually come back up and was holding at levels similar to a year ago. First, a strong domestic requirement should help keep demand healthy, especially for chemicals, fertilizers, and plastics. Second, federal environmental regulations should boost demand. Coal burning industries will need to go to clean fuels to meet upcoming requirements of the Clean Air Act.
Natural gas seems a likely choice.
Also, nuclear power plants have not turned out to be the energy source solution they were once believed to be. Natural gas demand should be up due to the demise of these plants. Lease sales have been an ongoing indicator of how strong the interest is in exploration and production in the Gulf of Mexico. The sales have been setting records for the last two years since the DWRR was passed. Records are being set both in terms of the number of bids and the dollars being spent per tract.