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Cheap Natural Gas: The New Global Energy Metric
CNBC.com | March 02, 2012 | 04:02 PM EST

Never before has natural gas in the U.S. been both so cheap, and abundant.

Natural gas futures have been trading at a decade low, below $2.50 per million BTUs, and government data this week showed inventory levels 45 percent above the 5-year average. Some traders believe the price can go even lower , before it heads higher.

"The industry is realigning. You have low natural gas prices and prices will stay low for awhile," said Kenneth Hersh, CEO of NGP Energy Capital Management. "There's such a surplus in the market and the system right now, so it may take several years to wear that off."

Hersh said the price will move higher—to about $4 per million BTUs—as supply stabilizes and the market goes back to pricing in replacement costs.

The natural gas boom will be a major topic of discussion at the CERA Week energy conference, starting Monday in Houston. Hersh is one of the speakers.

“Where natural gas prices are now kind of resets the economics for the whole energy market place,” said Daniel Yergin, chairman of IHS CERA, the energy research and advisory firm that hosts the conference. He is also CNBC's analyst on global energy.

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