Total marketed production of natural gas is expected to increase in 2008 and 2009. The EIA anticipates that recent deepwater drilling activities in the Gulf of Mexico will stimulate a 4.8% growth in production through 2008. A 2.7% increase in production is also expected from the contiguous U.S. states. A slight decrease in production is expected in 2009 from 2008 levels due to the status of current wells, rising costs, and minimal increases in rig drilling prospects.

In 1986, imports of LNG were minimal; by 2006, 2.9% of total U.S. natural gas consumption was imported. Canada has been the primary source of U.S imports, accounting for approximately 85%. Due to domestic use and a projected decline in supply, imports from Canada are expected to decrease by as much as 25% by 2030. At the same time, the U.S. is expecting imports of natural gas to increase by 30% to meet growing demand. It is anticipated that the U.S. will rely more on the Middle East and Africa to supply the LNG previously imported from Canada.

Due to the predicted increase in global demand for LNG, some companies are making huge investments in the industry. One company is investing $3 billion over the next six years in Nigeria to collect stranded natural gas. Currently, the largest deposits for natural gas are in Russia, Qatar, Indonesia, Malaysia, Algeria, and Australia. These six countries are reported to hold 70% of global gas reserves, 26% of which is Russian. Unfortunately, the ever-increasing cost of construction is impacting the ability of nations to develop LNG facilities. In Australia, an $11 billion facility was expected to come online in 2010, but this project is now projected to take five years longer than expected and cost $14 billion. Additional expansions are also in progress in Russia. In addition to its already large natural gas pipeline, Russia has recently proposed extending its natural gas pipeline to China and South Korea. According to the EIA, Russia recently traded pipeline gas for LNG with a plan to develop export facilities aimed at serving the Atlantic market.

The Middle East is already a major exporter of LNG, serving both the Atlantic and Pacific basins. Approximately 15% of LNG exports are imported by North America and Europe and 85% by Asia. It is anticipated that the Middle East will account for approximately 20% of the increase in production each year. Several LNG projects specifically designed for exportation are under construction in Qatar, with North America and Europe as the anticipated buyers.

Countries in Africa and parts of Asia (excluding China and India) are expected to increase natural gas production an average of 2.6% per year and increase market share from 14% in 2004 to 21% by 2030. A significant amount of the natural gas produced is exported, 26% from Africa and 50% from Asia. Several pipelines from North Africa to Europe are being considered, and LNG exports will continue to expand from West Africa.

Finally, two North American pipelines are expected to come online - a Canadian pipeline in 2012 and an Alaskan pipeline in 2018. The Alaskan pipeline has been the primary source of growth to domestic supply since 2004 and is expected to account for the 22% increase in U.S. supply by 2030.

Working gas inventory is broken down into three categories: production region, east consuming region, and west consuming region. On April 4, 2008, the EIA reported an inventory of 1,234 billion cubic feet (bcf), which was the lowest level reported since April 30, 2004. However, as of April 18, 2008, the inventory had increased by 51 bcf to 1,285 bcf. The current level of inventory is up compared to 2007, but is down compared to the five-year average. In total, working gas inventories are expected to increase through 2008 by a little over 0.5% with the greatest contribution coming from producing regions and the least from the west consuming region. Working gas inventories are forecasted to decline in 2009 by slightly less than 0.5% with the contributions from 2008 holding.

Barring any abnormal weather patterns, the EIA projects a limited growth of 1% or less in residential and commercial natural gas consumption through 2008 and 2009. Regional breakdowns suggest that New England will reduce consumption through 2008, more than any other region, while the East South Central U.S. region will increase consumption the most.

Globally, demand for LNG is expected to triple by the year 2020. Currently, Asia is the largest consumer, followed by Europe, and then the Americas. More currently, though, global gas demand is expected to increase 2.4% per year.

As an energy source, natural gas remains a key fuel in the electric power and industrial sectors because of its fuel efficiency and ability to burn cleaner than other petroleum products. According to the EIA, natural gas use for electric power is expected to decrease slightly through 2008 but increase by 3.0% through 2009. A longer term forecast indicates that natural gas consumption for generating electricity will peak in 2020. From 2004 through 2015, natural gas fired electricity is expected to increase from below 20% to roughly 22%. Post 2015, increasing natural gas prices, competition from alternative fuel sources, and government subsidized clean-technologies are expected to decrease the incentive to base new plants on natural gas in favor of coal. This is projected to reduce the natural gas share to approximately 16% and increase coal's share from nearly 50% in 2004 to more than 57% in 2030.

During cold months, natural gas use in the residential and commercial sectors increases for heating purposes. Unexpected or severe weather events can impact short-term demand at a rate faster than short-term supply can catch up, thus putting even more pressure on prices. Conversely, during hot months, natural gas use can increase for air cooling purposes. Abnormally hot weather can have similar effects on short-term supply and demand. In this respect, the effects could be magnified regardless of the type of weather if natural gas production is at or near full capacity with no short-term capacity relief available.