Natural gas prices throughout North America are determined by supply and demand. In the short-term, weather plays a significant role and will likely affect both sides of the economic equation. Winter temperatures increase demand, as many homes and businesses are heated with natural gas. Summertime temperatures also create additional demand. Air conditioners require electricity and many electricity utilities are powered by natural gas. As the demand increases, natural gas prices also increase.
Weather related events can also impact supply and demand. As hurricanes make their way into the Gulf of Mexico, natural gas platforms are typically shutdown and evacuated. Depending on the severity of the storm, such production facilities can be closed for extended periods of time due to damage. Inland gas pipelines can also sustain storm damage. Less production will ultimately lead to higher natural gas prices.
Over the long-term, economic conditions and environmental regulations can also impact natural gas prices. In a booming economy, manufacturers will produce more widgets. The more they produce…the longer than operate…the more energy they consume—whether heating and cooling their facilities or using electricity to run their production lines. In leaner times, these same manufacturers will use less energy. Less energy consumption will likely lead to reduced demand and decreasing natural gas prices.
When it comes to the environment, government legislation can often slow-down the drilling process by limiting the amount of drilling sites in a specific location or forcing companies to drill elsewhere due to the potential destruction of an endangered species’ natural habitat. Such government involvement almost always reduces the supply of natural gas and adversely affects natural gas prices.
At ECNG ENERGY, we understand the natural gas market. More importantly, we understand how volatile natural gas prices can affect both your ability to budget for your energy consumption costs and your bottom-line.
ECNG ENERGY is not a reseller. This means we do not profit from the sale of natural gas. As an independent energy consulting firm, our job is to help you lower your procurement costs, reduce your risk, and achieve your corporate objectives. We do so by providing customized value added services to natural gas users across North America.