Natural gas plays a major role in the United States' energy profile, where it accounts for approximately 24% of total energy, consumption. Its market share is likely to expand because of the favorable competitive position of gas in relation to other fuels, and the tightening environmental standards for fuel combustion. Industrial users, electric utilities, and gas producers and pipelines together account for 61.8% of the market; commercial and residential users combined are 37.8%.

The industry has gone through a metamorphosis since the enactment of the Natural Gas Policy Act of 1978, changing from an almost totally regulated industry, to one that today largely operates as a free market. The New York Mercantile Exchange launched the natural gas futures contract in April 1990; in that short time Volume and open interest have grown steadily and the contract has evolved to the point at which ever- increasing numbers of cash market transactions arc based on futures prices.

Industry participation in the natural gas futures market has broadened steadily and comprises a wide cross-section of the industry from producers to end-users, Recent legislation concerning air pollution control should contribute to the market's further growth.

From a market of stable but controlled prices and long-term contracts, the natural gas market has emerged as a dynamics highly competitive business with flexible pricing, an active spot market and widespread use of short-to-medium-term contracts. This is causing a fundamental change in the way each of the traditional segments of the industry operate: producers, pipelines, gas utilities, and industrial users.

The radical change has also led to the development and rapid growth of a business that did not exist a few years ago, the natural gas marketer, who links buyers with sellers and often arranges pipeline transportation for his customers. The natural gas futures contract is especially well suited to manage the increasing price risk that has accompanied these market changes.