US natural gas prices averaged below $3/MMBtu for the first time since the late 1990s amid a glut of production, leaving many if not most natural gas producers in a bind. Small gas producers are expected to continue struggling this year with questions remaining about their ability to survive. Low natural gas prices, however, will continue driving a renaissance in the US petrochemical and manufacturing sectors as they lower feedstock costs. US natural gas exports will remain a controversial issue this year as supporters and adversaries escalate political tensions around how much exports could impact domestic natural gas prices.
Downstream Profit margins for the US refining business were up across the board in 2012, with Midwest refineries having another stellar year thanks to access to cheaper WTI and Canadian crudes. While expected to diminish somewhat, the structural imbalances in the US Midcontinent are expected to continue this year, prolonging the advantage of regional refiners that have access to cheaper oil supplies.