Why have natural gas commodity prices increased in recent years?
Pricing is largely tied to natural gas supply and demand across North America. Present and future production and storage levels are two of the major determining factors. Others include weather (heat waves, cold snaps and hurricanes), economic growth and the cost of competing fuels. Increased demand for natural gas puts upward price pressure on the commodity. In recent years strong demand has been due, in large measure, to its attractiveness as a clean burning alternative to other fossil fuels such as coal and fuel oil. Conventional gas-bearing basins across the continent are becoming less productive forcing the industry to turn to less conventional and more costly methods of production. Since natural gas competes with oil as a source of fuel, higher oil prices have the effect of supporting higher natural gas prices, particularly when the supply/demand balance is tight.
