Page 54 - MEX-Yearbook-2017
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Commodity Insights
Natural Gas
Introduction falls with the slowdown or decline of economic growth of the economy.
Natural gas is a gas that consists primarily of methane and is an important fuel • Natural gas comprises almost one-fourth of all primary energy used in the
source around the world. Natural gas is generally created using one of two
mechanisms: biogenic and thermogenic. Biogenic is created by methanogenic U.S. and is directly linked to jobs and economic health.
life forms that exist in shallow waters or landfills while further down in the • There are nearly 11 million road vehicles worldwide that run on natural gas
earth thermogenic gas is created from organic material that has been buried for
a great deal of time. as a fuel .This gas is used in a compressed or liquefied state to powers cars,
Natural gas is a major source of power generation, especially for heating and trucks, taxis, and buses.
cooling systems in the U.S. Generally, the product is used to either power gas • Hurricanes, storms, and other climatic conditions also affect the production
turbines or burned to create steam and power steam turbines instead. The fuel is and supply of natural gas thus hitting the gas prices.
often preferred to coal or oil since it is far cleaner and produces less greenhouse • The demand for natural gas increases tremendously in winter because
gases than its other fossil fuel cousins. residential and commercial end users consume natural gas for heating,
Furthermore, since the fuel has a very low density, piping the fuel across which increases the demand and pushes the price upward.
oceans or in cargo ships is impractical ensuring that gas demand is a much • The environmental and political policies of the major producing and
localized business. However, natural gas has seen some developments in this consuming countries also affect the price. Favorable policies increase
respect in the last few years thanks to the advent of Compressed Natural Gas the production and consumption whereas unfavorable policies reduce
or CNG. This fuel is generally considered ‘greener’ than gasoline and since it production and consumption drastically.
is very abundant in major gasoline consuming markets such as the U.S. some • The high storage levels of natural gas reduce the price whereas reduction
have called for increased reliance on the fuel for transportation. increases the price level.
• Iron, steel, and paper mills and electricity generators consume a large
Fundamental Facts volume of energy and they can switch between natural gas, petroleum and
• Oil is the substitute product of natural gas so the price of oil affects coal depending upon the price of other energy. So, the price of other energy
such petroleum product and coal can affect the demand and price of natural
the price of natural gas. If the price of oil rises, people may shift to the gas.
consumption of natural gas. • As the shale gas extraction level is increasing, the supply tends to increase
• The demand for natural gas increases with the growth of the economy as thus reducing the price. Also, the high drilling rate increases the supply.
it is used in the industrial sector as plant fuel and feedstock. The demand
53 | MEX NEPAL YEAR BOOK 2017
