The price of gas surged to record highs in October, with some markets seeing prices surge to record levels.
Gas prices in some states, however, appear to be slowing.
A new report from the energy consulting firm Genscape says that prices in states where gas prices were rising in October may be down to a combination of a chemical shift and a gas-industry slowdown.
The Gensache report, which is based on survey data and gas industry reports, found that gas prices in the Northeast and Midwest have risen to record lows since last October.
But it also noted that the gas industry has been slowing down, suggesting that the spike could be attributed to the effects of Hurricane Sandy, which hit the Northeast in December.
Gas-industy experts are generally bullish on the gas market, as the price of natural gas is rising because of increased drilling and production.
But the Genschee report suggests that the market is also being driven by gas-market distortions and manipulation, especially in states that have experienced record-low natural gas prices.
“Gas prices are rising in certain regions, but there are also gas prices that are rising faster than the market, and that has been the case for many years,” David DeLong, Gensack analyst, told The Hill.
“It’s the difference between gas prices being in the middle of a natural gas boom and prices being way out of line.
There’s some indication that we’re seeing a gas price shift.”
DeLong said the shift in gas pricing could be tied to the ongoing shift in the US economy, where the price elasticity of demand is increasing.
For example, if there is an increase in oil production, the price can be higher.
But if oil production falls, then demand can drop.
The gas industry is also facing competition from renewables, as both natural gas and renewables are gaining market share in many states, and are displacing coal.
The US coal industry has already experienced a massive decline, with coal consumption down more than 60 percent in recent years.
The industry has also been hit by the economic downturn, with the number of companies in the energy sector down to an all-time low, and job losses at the industry have also been a factor in gas-price spikes.
But DeLong said that the report does not directly link the gas prices to the energy industry slowdown.
“There is a correlation between natural gas supply and gas prices, but it is not a direct cause of the drop in gas price,” DeLong told The Huffington Post.
“The effect of the energy-sector slowdown on gas prices is likely driven by factors other than the natural gas market itself, including the fact that the oil and gas industries have been slowing.
In the last several months, they’ve also been increasing production in many places.”
Genscape has also found that price hikes have been linked to a decline in solar power, but the company does not believe the decline in demand has been a direct result of the solar industry’s decline.
DeLong also said that it is possible that a gas tax increase could slow gas prices if a large amount of new capacity is built, as has been happening in the Midwest.
But he said that there is also a risk that a price increase could increase demand for other types of energy, which could increase the price for gas.
“If the market continues to be in a natural-gas boom, it may not cause a gas surge.
If demand is still low, the increase in gas will be offset by an increase to other types the market might have a problem with,” DeLoop said.