Long-term Contracting for Natural Gas: Examination of the Issues that Affect the Potential for the Increased Use of Contracting to Stabilize Consumer Prices

By Bruce B. Henning 
Vice President, Energy Regulatory and Market Analysis ICF International

One important feature of current natural gas markets is the heavy reliance on relatively short-term contracts for the purchase of the commodity. When contrasted with the contract practices that existed 25 or 30 years ago, the extent of the changes in the nature of the market becomes clear. Prior to the restructuring of the industry, gas supply contracts often had terms as short as 10 years.