supply and demandI copied this from a previouse post
North American Natural Gas Mkts To Tighten -BP Executive
Tuesday March 4, 4:01 pm ET
CALGARY -(Dow Jones)- The balance between natural gas supply and demand in North America will tighten further, as production continues to decline and consumption by power generators increases, an executive with BP PLC said Tuesday.
The result will be increased market volatility, with price spikes followed by demand destruction, said Tim Bullock, president of BP Gas and Power North America.
"In the future, as we see the supply demand balance tighten, I suspect we are likely to see the kinds of price spikes we see now as a method to balance the market," Bullock said at an energy conference in Calgary.
Short term stability will be achieved by high prices forcing cuts in consumption, he said.
"The market does a good job to balance things out," he said.
In the long term, stabilizing prices will require more investment in pipeline infrastructure, construction of more natural gas storage facilities and increased flexibility in supply through sources such as liquefied natural gas imported from outside North America, Bullock said.
Why is production on the decrease when demand is high?