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Natural gas prices are down like crazy this year as you can see from the chart below:

enter image description here

I don't understand how these prices are maintainable. I know these this price trend is largely because of the abnormally warm weather this winter. I also noticed crude oil down a ton, and that the coal industry is almost dead.

If prices are down so much why are suppliers even continuing to supply gas when their margins are low and no one is buying it? What would save the industry?

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  • $\begingroup$ "What would save the industry?" - Is the industry in danger? $\endgroup$
    – FooBar
    Dec 11 '15 at 16:55
  • $\begingroup$ Or rather what would cause prices to go back up? $\endgroup$
    – bigpotato
    Dec 11 '15 at 16:59
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    $\begingroup$ Much better, and I would definitely replace the other part with this. "Prices going up" is an objective question, and whether or not the economy/industry is in danger is pretty debatable, and not at all clear from the decrease in prices that you described beforehand. $\endgroup$
    – FooBar
    Dec 11 '15 at 17:08
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Two things would cause the price to go up.

The supply curve could move to the left: some suppliers could leave the market, some wells might switch off.

The demand curve could move to the right: new sources of demand; e.g. a burst of extremely cold weather.

This price drop is a step towards economic efficiency. You'll know when it's more efficient, because almost the whole oil & gas industry will have closed apart from a few niche applications.

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