Why are prices for natural gas rising?
Natural gas prices, like all heating fuels prices, are determined by a number of factors. First, natural gas prices usually follow crude oil price trends – in other words, if the price of oil is high, so is the price of natural gas. Supply and demand is another factor. Natural gas demand for home heating and other uses such as generating electricity is increasing. Many businesses have switched to using natural gas (where available) since heating oil prices have gone up, which has increased the demand. Other reasons for price increases include: a depletion of older gas wells; there is no longer a surplus of natural gas as there has been in the past 10 years; and global energy consumption is increasing.
Natural gas prices, like all heating fuels prices, are determined by a number of factors. First, natural gas prices usually follow crude oil price trends – in other words, if the price of oil is high, so is the price of natural gas. Supply and demand is another factor: demand for natural gas, according to the Department of Energy, is up 3% while production is only up 1%. Many businesses have switched to using natural gas since heating oil prices have gone up, which has increased the demand. Natural gas production, as well as access to storage facilities, was also seriously halted by hurricane Katrina. Other reasons for price increases include: a depletion of older gas wells; there is no longer a surplus of natural gas as there has been in the past 10 years; and energy consumption is increasing in relation to improved economic outlook.
