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!