The cost of natural gas

Natural Gasoline Prices – The Potential Effect on Consumers

The cost of natural gas is determined by the amount of gas that can be produced and the amount that can be supplied. Natural gas is a product of petroleum. Because there are typically limited short-term solutions to supply and demand natural gas as a source of energy and heating, fluctuations in supply or increased demand over an extended period can result in wide-ranging price changes. When comparing prices of natural gas with other fuels, such as coal, oil, and other commodities, you will want to make certain that the comparison includes not only the current prices but also projected future prices based on current and emerging technologies.


Many factors, both long-term and short-term

contribute to natural gas prices. These factors include existing and ongoing technological developments, demand in the marketplace, and the rate of exploration for new supplies. Technological developments that impact the cost of producing natural gas include advances in drilling and production technology, such as horizontal directional drilling, which have resulted in tighter wells and increased productivity. The increase in domestic consumption has also resulted in a higher demand for natural gas, which naturally drives up prices. Additionally, the increase in international trade and increased demand for energy worldwide have resulted in increases in the price of natural gas, although these factors have offset some of the recent decreases.


Beyond the factors affecting the supply of natural gas

demand, and the industry itself, natural gas prices affect the consumer who relies on the service. Natural gas prices can directly affect how much a consumer pays for their heating and cooling bills. If a consumer agrees to an annual natural gas payment plan, the monthly bill will be based on this schedule. If demand for natural gas rises suddenly, the consumer will be faced with an increase in their monthly bill. To compensate for the higher costs associated with increased demand, most household budgets will have to be tightened, resulting in a reduction in the quality of goods purchased, and an increase in debt.


Beyond these indirect effects

natural gas production and prices may also directly impact the quality of the goods produced. When prices rise, companies that produce natural gas will be affected, forcing the closing of plants and the closure of mines. In addition, the high cost of producing natural gas in the short term may result in a reduction in the long-term capacity to produce, resulting in less of a need for the commodity in the future. As well, when natural gas prices rise, it may increase the cost of transmission and distribution, affecting local businesses and consumers directly.


Natural gas production and prices play a large role

in our Nation’s security. Gas is needed for industrial, commercial, and municipal use, and if the prices increase, it is estimated that the demand for gas will rise as well. This increase in demand may increase the production of infrastructure necessary for transporting and distributing gas, making the nation less dependent on imported resources. If the increase in the country’s dependence on foreign oil results in higher prices, the United States will become more vulnerable to economic or political instability overseas, increasing the danger of a breakdown of the global energy trade.


While high gas prices

are a significant concern for many, it is important to note that the increased demand is not likely to significantly affect the Nation’s economy in the long run. In fact, recent reports indicate that the rising prices have actually helped the economy. Increasing demand due to the cold weather has resulted in higher retail sales, which has helped the economy recover. Overall, the positive economic conditions that have resulted from the natural gas demand are one of the main factors in the success of our Nation’s recovery. These conditions are likely to remain favorable for the foreseeable future, providing a positive image for consumers and business owners everywhere.

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