The cost of natural gas, a clean and abundant fuel source, has risen dramatically in recent months. In the United States, the average household can expect to pay about 30 percent more for natural gas than just a few years ago. While a variety of factors have contributed to the increase in natural gas prices, the most significant is the growing demand for natural gas, particularly in the electric power sector.
The greater demand for natural gas has increased prices due to increased supplier competition. This surge in demand is due, in part, to the continued shift away from coal-fired power plants and toward natural gas plants, as well as the growing popularity of natural gas vehicles. With limited storage capacity and potential supply constraints, the increased demand has put increased pressure on the market, resulting in higher prices for natural gas.
Another factor contributing to higher natural gas prices is the recent decrease in domestic production. Some significant producers have moved away from natural gas production in favor of oil exploration. This decline in production, combined with the increase in demand, has made it more challenging to meet the needs of consumers. Additionally, the cold winter of 2018-19 sent prices soaring due to increased demand for heating during the colder months. This, too, has contributed to higher prices.
Finally, the increased use of fracking to access shale gas deposits has also resulted in higher prices. While fracking has allowed access to vast reserves of natural gas, it has also resulted in sharp fluctuations in the pricing of the commodity. As such, the price of natural gas can be volatile, making it difficult for producers and consumers to predict and plan for future pricing.
As the demand for natural gas continues to rise, prices will likely remain high in the near term. Consumers will neet to be prepared to pay more for their natural gas and be mindful of ways to conserve energy and reduce their usage. Producers may need to look for new sources of the commodity or find ways to limit production costs to keep prices from rising too quickly.