Increase in natural gas supply generally result in lower natural gas prices, and decrease in supply leads to higher prices. Demand increases typically leads to higher prices, and demand decreases tend to lower costs. Higher prices tend to moderate or reduce the need and encourage production, and lower prices tend to have the opposite effects.
The factors that affect the heat and natural gas prices are as follows:
- Impact of weather Hurricanes and other severe weather can affect the natural gas supply.
Heat and Natural gas prices have been affected when hurricanes disrupted natural gas production in the Gulf of Mexico, as in 2005 with Hurricanes Katrina and Rita. Increasing the heat and natural gas rate automatically increases the natural gas price in importing countries. In recent years, Alberta has focused more on renewable energy due to the increase in heat and the natural gas rate, which ultimately increases heat and natural gas prices and makes them costly for ordinary people.
Freezing weather or hot weather can also disrupt natural gas production as it increases the consumption of heat and natural gas according to changes in temperature. If these supply disruptions occur when demand for natural gas is high, prices can rise more.
- Economic growth Economic strength affects the natural gas market.
During economic growth, increased demand for goods and services from the commercial and industrial sectors can increase natural gas consumption. Increase in economic consumption can be particularly noticeable in industries that use natural gas as an energy source and as a raw material for producing many products such as fertilizers and pharmaceuticals.
- Competition between resources
Some mass fuel consumers, such as power plants, steel, and paper mills, may switch between natural gas, Heat energy, coal, and oil, depending on the cost of each fuel. As the cost of other fuels goes down, the demand for natural gas and electricity may decrease, and the price of heat and natural gas may drop. If the prices of competing fuels rise relative to the costs of natural gas, switching from those fuels to natural gas can increase the demand and cost of natural gas.
- Natural gas storage
The level of natural gas in the underground storage field significantly impacts the overall supply. Storage helps manage seasonal and sudden increases in demand that domestic production and imports may not be able to accommodate. When demand is low, storage absorbs excess domestic supply. Storage also supports pipeline operations and trading hub service.
- Natural gas supply
The fundamental concept of economics is that an increase in supply decreases the commodity's price. The same applies to Heat and natural gas prices. Demand increases generally lead to higher prices and fall in order lead to lower prices. Natural gas supply depends on the government policies of importing and exporting countries, their trade relation, type of economy, and international standards.
