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| Fig. 1: California natural gas consumption by sector. Electric power and industrial consumption decreased from 2012 to 2023. [1] (Image Source: S. Kostelnik) |
Every year, the US Energy Information Administration (EIA) produces a Natural Gas Annual report (NGA). The NGA provides an annual balance sheet of natural gas supply and consumption for the nation as well as for each state, and also records natural gas prices. For this piece, I collected California- specific data from each NGA since 2012 and identified trends in supply, consumption, and price. Key trends are reported on below. Note that all data except population is sourced from the NGAs. [1]
In 2023, California was the second largest consumer of natural gas among the states, behind only Texas. Even so, California lowered its dependence on natural gas over the time studied: consumption within the state decreased by 16% between 2012 and 2023. In the final year, California was responsible for 7.4% of total natural gas consumption in the country, despite comprising roughly 12% of the US population. [2]
This drop is due entirely to decreases in consumption by industrial consumers and electric power generators, with the latter accounting for over 70% of the net decrease in consumption. The number of industrial consumers declined 9.5% from 2013 to 2023 while industrial per-capita consumption dropped 9%, suggesting industrial customers left the state or went out of business over this period, and the ones left increased their efficiency. Residential and commercial consumption rose very slightly, while natural gas use for vehicle fuel more than doubled between 2012 and 2023 (though it accounted for just 1.5% of 2023 consumption).
Note that, while the energy sector drove most of the overall drop in consumption between 2012 and 2023, consumption in the sector stayed steady and even increased between 2019 and 2023. This finding suggests that demand for natural gas as a fuel for electricity generation has stayed strong, even as more renewable sources come online in the state. The drop in energy sector consumption in the early part of the 2010s was driven by rapid increases in solar capacity in the state, beginning in 2013, which negated the need for large quantities of daytime generation from natural gas plants. [3] The new baseline is likely determined by the demand for steep ramping in the evening and steady baseload for nighttime hours.
Imports of natural gas into California stayed relatively steady between 2012 and 2023. Arizona accounted for 44% of 2023 imports into California, with Oregon (33%) and Nevada (23%) making up most of the rest. None of these states are significant producers of natural gas, suggesting that these imports are mostly passthroughs from larger producer basins in Texas, Oklahoma, Canada, New Mexico, and Colorado, among others.
California's in-state gas production total made up only 6.5% of its consumption in 2023, having dropped nearly 50% over the period examined. For this reason, imports are key to the continued support of the energy, industrial, commercial, and residential sectors. In fact, imports outpaced consumption in the state in every year from 2019 to 2023.
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| Fig. 2: Citygate prices ($/Mcf) increased sharply from 2020 to 2023. [1] (Image Source: S. Kostelnik) |
California natural gas citygate prices fluctuated around $3.50/Mcf between 2012 and 2020 before spiking rapidly towards $9.00/Mcf in the three years following (see Fig. 2). This does not appear to be an enduring trend, but rather a fluctuation. Though the 2024 NGA has not been released at the time of writing, indicative prices have returned to the more gentle long-term trendline of about $3.50/Mcf.
© Satchel Kostelnik. The author warrants that the work is the author's own and that Stanford University provided no input other than typesetting and referencing guidelines. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.
[1] "Natural Gas Annual 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021, 2022, 2023," US Energy Information, 2012-2013.
[2] L. Blakeslee et al., "Age and Sex Composition: 2020," US Census Bureau, C2020BR-06, May 2023.
[3] "State Energy Consumption Estimates, 1960 Through 2022," U.S. Energy Information, DOE/EIA-0214(2022), June 2024.