Over the past months the price of natural gas has progressively began to lower. One of the contributing factors of the decline in the price is the warmer winter. With temperatures on the rise the demand for natural gas for heating sources is reduced. Heating degree days are 12% lower than the 30 year average, while there is a surplus of natural gas in storage. Comparing the underground storage levels now to the levels a year ago there is roughly about a 20% increase in 2012.
Gas production is also up as well. Comparing the rate of dry gas production to a year ago there is almost a 10% rise. This leads to a large supply of natural gas with a lessened demand. The price may drop lower even further if the demand for natural gas is lower than normal averages.
Royalty owners have begun to receive dwindling royalty payments due to the decrease in the price of natural gas and will continue to get smaller payments due to the situation. With this reduction in payments received royalty owners may be open to selling their interests in order to receive a more worthwhile financial compensation rather than hoping for an upturn in the natural gas market in the future. Prices have drastically declined since 2008, with the current price at a market low.