Upside Risk to US Gas Prices Amid Lack of Infrastructure: EQT

The CEO of US gas producer EQT warned that a lack of pipelines and storage facilities could trigger dramatic price swings in the coming years according to Bloomberg.

• Since 2010, US gas demand has increased 50% but pipeline capacity is up just 35% and storage capacity up by only 10%, CEO Toby Rice said.
• The market is therefore prone to wild price swings, ranging from current prices around $1.75/mmbtu to as high as $8/mmbtu.
• “This is the world we live in unless we get serious about getting more infrastructure built,” said Rice.
• Last year, he warned that a pipeline crunch threatened to trigger an energy crisis. He also said falling prices will lead to a slowdown in drilling with prices well below the breakeven cost of production.
• A rally could start seeing industrial demand destruction driving prices with no effective lid on prices after the closure of dozens of US coal plants in recent years.