Natural Gas Demand

How Does Cold Weather Impact Natural Gas Prices?

With winter in our midst, our concern will be keeping warm. We will be turning on our furnaces and bringing out extra blankets to fight off the cold. Heating our homes can be one of the bigger expenses we run into as far as utilities are concerned, and since everyone is turning on the heat, more natural gas is being used. The question is, how does cold weather impact natural gas prices?

Around half of United States households use natural gas for heating and cooling their household. The price of natural gas is dependent on supply and demand. Therefore, when temperatures outside reach more into the extremes there is more of a demand for natural gas usage. In the winter, your natural gas prices may increase slightly because there is more demand for natural gas so people can heat their homes and keep themselves warm.

The prices of natural gas are also dependent on how much natural gas is in the US natural gas inventories. Inventories start to build up at the end of the winter, but if a winter is long and particularly cold, it can lead to an increase in prices because the demand is high and the inventory is low.

Other weather conditions can also effect the prices of natural gas because they can lead to the disruption of production. Hurricanes and severe weather can lead to the slowing or stoppage of natural gas production. This will lead to the US having less natural gas, so that can also potentially affect the prices. However, most of the natural gas we use comes from the US, so we do have easy access to it, and the supply is there for us.

It is good to know that the price of natural gas can change just so you are prepared in case it happens, but it is also important to remember that natural gas is one of the cheapest, cleanest-burning fossil fuels. Even if prices do change, you are still getting a great source of energy at a good price. 

Factors That Affect Natural Gas Prices

We are all familiar with the flux of prices regarding fuel. There have been many times recently when gasoline prices have increased based on supply and demand, but what about natural gas? This resource heats our homes and gives us energy. What factors affect the change in natural gas pricing?

1. Supply and Demand – Like everything else, supply and demand has any influence on price. That is why in winter months natural gas prices can increase because people use this resource to heat their homes.

2. Weather – Weather also has an impact because it can increase the demand and use of natural gas. Also, severe storms like hurricanes can slow efforts to obtain natural gas.

3. Imports and Exports – This is often a factor regarding sources of energy. However, the United States gets its natural gas predominately from inside its own borders. This means you don’t have to worry much about the imports and exports; with natural gas, we have enough to fuel our country right from our very own land!

4. Competition Among Other Resources – Natural gas prices can be affected by the prices of other energy sources because they are in competition with one another.

5. Natural Gas Storage – The amount of natural gas in storage is also a factor that can affect price. However, natural gas is a great resource because it can be stored. During summer months, when the demand for natural gas is lessened, we replenish and increase storage, so we have plenty of natural gas for when the demand increases.

There are a few factors that can affect the price of natural gas, but overall this is a great resource to use because it has many advantages. We have lots of natural gas in the United States, so we can get the supply we need. Natural gas is also one of the cleanest burning sources of energy and one of the cheapest. There are many reasons why natural gas is a great resource for energy in your house. 

Rising Natural Gas Prices due to Cold Weather

Cold weather brings many things: snow, cautious travels, and rising natural gas prices. The colder the weather, the higher natural gas consumption. About half of the households in the U.S use natural gas as their primary heating fuel, so many businesses and private homes turn their indoor heating on as the outdoor weather gets colder.

With natural gas having limited short-term alternatives, prices reflect the changes in supply as well as demand. A decrease in the supply will push prices up, and most likely discourage production and sales from storage inventories. An increase in the supply will do the exact opposite.

The winter weather will raise the demand for heating, as the summer will bring the need for cooling. This winter has brought many spontaneous storms and unpredictable weather, which results in even higher prices for natural gas, as there was not enough time for the supply to react.

With the cold temperatures this season, it’s important to keep an eye out for wellhead freeze-offs. What exactly is a freeze-off? The natural gas coming up the well pipe includes moisture. When the temperatures outside drop below freezing, the moisture will freeze at the surface, if not properly insulated.

Thankfully, natural gas has kept up with the severe winter storms this season through their consistent production. Hopefully Groundhog’s Day will reveal that we only have a few short weeks to go!

How Natural Gas Pricing Works

Money sign on fire

The process in which natural gas is given a price tag is full of endless influences. However, it has been recognized that there has been a shift in some of the heavier influences affecting the cost of the fossil fuel. At times consumers may wonder exactly where the money is going when these prices take a hike. Regardless of the fluctuation, it appears that there will forever be a supply and demand configuration in matters regarding this particular resource.

As the winter months have proven to be some of the colder months we have seen in a while, it is no mystery that the charges on the utility bill are reflecting displeasing numbers as well. The weather we experience has been an obvious reflection on the supply and demand of the natural gas we need to maintain a comfortable life. That comfort comes at a cost though. Keep in mind that while it is colder outside, we tend to stay indoors more. Being indoors will require the use of more utilities that extract the use of the fossil fuel beyond more than just heating our homes but also in routine activities that take place in our domestic lifestyles.

The process in which charges are associated will reflect in recovery of the fuel, distribution of the natural gas and a fixed customer charge for necessary services to maintain usage of the resource. Understanding how the money is distributed based on the monthly utility bill can give an individual some sound mind about their ongoing uses of natural gas. Charges related to natural gas consist of more than 50% of an average utility bill. It is also beneficial to know that it is typical that companies do not make a profit on natural gas but rather charge the rate they, themselves, are subject to pay.

The amounts in which the population consumes this resource will continue to drive the demand levels and in return the natural gas deposits will be supplied to us at a cost. With the knowledge obtained on different influences there may be ways to manipulate the individual demand one might seek for their own usage. However the cost factor will always remain necessary and influenced by a variety of differing variables.

Rumors of Natural Gas Inventory Decline

icicles hanging off a metal pipe

An unseasonably cold winter has many implications, one being the increased demand for natural gas to heat homes across the country. Due to this drastic demand, it is no surprise that working gas in storage is much lower than last year. The U.S. Energy Information Administration recently reported that natural gas totaled 1.44 trillion cubic feet, while the same period last year totaled 2.42 trillion cubic feet. These low storage numbers continue to drop below the EIA’s five-year calculations.

Stocks and natural gas prices have been affected by this inventory decline. Consumers were forced to pay a five-year high of $6.15 per billion BTUs (British thermal units) in late February. In just a week’s time, the prices had increased almost $.50. Large natural gas producers in the United States are seeing the effects as well. Exxon Mobil Corporation was up about 0.8%, Chesapeake Energy Corp. was up 0.2% and EOG Resources Inc. was up 0.9%. Additionally, The U.S. Natural Gas Fun, which tracks spot prices, was down 0.6%, whereas The Market Vector Oil Services ETF, which includes major drillers and service companies, was up 0.4%.

However, the anticipation of warmer temperatures will lessen prices. Stephen Schork, President of Schork Group Inc., a consulting group in Pennsylvania explains, “This is a pretty good sign the run-up has run its course. Demand is going to remain strong, but we are at the end of the season and prices aren’t reacting the way they would have a month ago. At these prices, production is going to be very strong.”  The beginning of March marked the first monthly decline since September and futures dropped 25 percent, one of the biggest one-week price drops since 1996.

Although this winter was one of highs and lows, the spring forecasts look promising and has again led to a decline in natural gas futures.

How Cold Weather Affects Natural Gas Distribution

Snow covered road on a sunny day

There are many factors that impact the distribution of natural gas and the cold weather is one of the most notable. The ways in which cold weather can impact the access to the significant resource is commonly acknowledged through prices, demand and withdraw. There are several factors to consider but the most obvious are those that directly affect the consumers.

When the temperatures drop the need for the resource increases and our budgets will stretch to accommodate for the purchase. It is no mystery that our economy has learned there are places to save a few dollars yet some necessities, like natural gas, are worth the asking price. Regardless of the costs we find it necessary to meet the needs of our lifestyle more so than ever in the uncontrollable temperature of the winter months.

While price reflects the most direct impact on the distribution of natural gas the demand is also a part of the equation. Majority of US homes are utilizing natural gas, and certain areas experience different highs and lows which will embark upon the distribution levels expected for each region. The impact a winter has on the varying locations will drive the demand and in return the demand will call for more extraction.

The withdraw of natural gas consists of a process that can be overwhelming. When the cold weather hits the states it spirals down to the extreme, and absolute critical, need to heat homes and remain safe. The truth of the drilling matter is that there will be increased extraction that will call for an increase in mechanical needs and the obligation to stray from contracts to provide for the high demands. It is a circle of life for the resource as the price will be paid, the demands will be accommodated, and the drilling will go on.

Natural gas is one valuable resource that contributes to most of our daily conveniences. The weather will fluctuate many variables regarding the distribution but it will remain a constant need for many.

Natural Gas Exploration Process

Oil well in open field

In our busy everyday lives it can be easy to ignore the complex processes that allow us to complete our day to day tasks. You may have never asked yourself before, but where would we be without natural gas? Although it may not seem relevant to your life, natural gas is one of the most valuable energy resources because it is used in a variety of ways. Without natural gas we would have less electric power, fewer heating sources and more polluted transportation.

Natural Gas Exploration Process

It is interesting to look at the exploration of natural gas, which begins as geologists examine the earth’s surface in the hopes of finding where gas or petroleum deposits exist. Thanks to advanced technologies, the search has become much easier in the last 20 years. Often times, natural gas reservoirs are characterized by anticline slopes and domes. Mapping and surveying the land for these formations combined with knowledge of particular rock formations makes finding natural gas much easier.

Another aid in natural gas exploration came with seismology, a study of how energy moves through the earth in seismic waves, interacting differently with different types of underground formations. The study was first used to measure earthquakes, but eventually geologists began using the interactions to create artificial vibrations on the earth’s surface. After analyzing the vibrations they can better understand what lies beneath and more accurately determine if a reservoir has been located.

Seismology is used for both onshore and offshore exploration. Onshore seismic vibrations are detected by using a machine called a geophone which is embedded into the ground. The geophone gathers data and sends it to a seismic recording truck to be recorded and further interpreted. A similar process is used for offshore exploration but rather than a seismic truck, hydrophones are used to detect the underwater seismic waves. The hydrophones are towed behind a ship and send bursts of compressed air through the water that can travel through Earth’s crust and create a seismic reflection.

While the process of finding natural gas reservoirs is both a scientific and intricate process, it is one worth understanding; without it we may be at a loss of many of our daily resources.

US Natural Gas Reserves

Oil wells

Natural gas is an ever-changing topic of discussion. With new discoveries, new technology and constant progression it has become big part of our economic focus. The United States and nations around the world are becoming extremely innovative in the process of finding and utilizing natural gas.

The U.S. economy is benefiting greatly from the technological advancements in the natural gas industry. As of 2012, 334 trillion cubic feet of proved reserves of natural gas make North America the fourth largest of other nations in comparison. There are several aspects that come into consideration when the natural gas composites can be declared proven.

There is no question that a large number is associated with the natural gas that is proven in the United States. That number, 334 trillion, would not be possible without the economic stability that is involved in the discovery and execution of obtaining the fossil fuel. The benefit of the gas needs to be worth more than the cost of drilling in order to confirm the end result is proven natural gas.

The newer technologies that are being implemented in the industry are helping eliminate a lot of the cost factors in the drilling process. Technology has allowed the United States to be more efficient and promote growth in a motivated nation. Better-equipped machinery grants the engineering of the natural gas the boost it needs to increase that margin between the cost and the benefit.  As a result the U.S. will see more successful and stable economic conditions that are favorable for drilling.

The expanding knowledge of the detection and consumption of natural gas is in fact a contributing factor to the United States rank among nations in assessment. The economy reflects within the numbers reported in the trillions of proven natural gas in our possession. While it is a fast growing theme around the world, the United States appears to be comfortable with the pace.

Is Natural Gas Renewable?

Natural gas burning in rows of blue

Is natural gas renewable? The answer is a little complicated. Natural gas, the fossil fuel, is not a renewable resource. Much of this natural gas we are burning now formed in deposits nearly 300 million years ago. While it may not take another 300 million years to form, scientists theorize that more could form in 50 million years. Since this formation will still not happen within any of our lifetimes, we do not regard natural gas derived from fossil fuels as a renewable resource.

However, there are more ways to obtain variations of natural gas rather than relying on the formation of the fossil fuel. Natural gas is comprised mostly of methane gas, with small traces of ethane, propane, butane and nitrogen. Since natural gas is primarily methane, a substance that is readily available, this can be used to manufacture renewable natural gas, also known as sustainable natural gas.

Methane is manufactured from organic materials in decomposition phases. These materials include substances like livestock manure and vegetation collected from landfills. Renewable natural gas can then be produced economically, and distributed to natural gas suppliers like Walton EMC along the existing gas pipeline system. This makes for efficient method of supplying existing natural gas suppliers with renewable heat and renewable gas energy, at no additional cost to the customer.

Is there a difference between nonrenewable natural gas and renewable natural gas? None that you’ll notice!  Nonrenewable natural gas can be used in the same way as traditional gas to heat water, prepare meals and warm our homes and offices. However, the use of renewable natural gas comes with an added benefit for the environment. When renewable natural gas is converted into energy, methane that would otherwise have entered directly into the atmosphere is ignited which results in the release of a much less damaging greenhouse emission.

How Much Natural Gas is There?

Natural gas burning

Natural gas is used for so many reasons and materials that it’s difficult to gauge just how much natural gas is needed to produce everything that we need to use it for.  The question that several people wonder is how much natural gas is out there and ready to be used for our disposal? This non-renewable resource is currently plentiful; however, the problem is that it takes thousands of years to form. So, if we continually keep using the same levels of natural gas, will we always have enough since the resource takes so long to reproduce?

Natural Gas Supply

Since natural gas is currently irreplaceable, knowing our current status of natural gas is crucial.  However, there is no way to know just how much natural gas is in the ground.  With a great deal of estimation, scientists and researchers can come up with some figures that are scientifically accurate, but not spot on.  Many people believe that natural gas is running out, however, this misconception is far from the truth.  It is estimated that we still have 2,543 trillion cubic feet of natural gas in our country alone.  The southern-most part of the United States holds majority of our natural gas supply in states such as: Texas, Oklahoma, New Mexico and Louisiana.  This vast amount doesn’t even take into account undiscovered, unproved or unconventional natural gas.

Furthermore, shale gas amounts are drastically increasing which is immensely helping our natural gas supply.  We have been able to take natural gas from shale rock which has been found in over 20 states in the United States.  This resources has drastically increased our amount of natural gas.  Although there’s no way to know for sure how much is there right now, with continuing advances and studies of natural gas, the projections of our natural gas supply are only estimated to increase.  As technology evolves, finding new areas and resources that carry natural gas will be at our country’s finger tips.