U.S. Energy Information Administration - EIA - Independent Statistics and Analysis
Frequently Asked Questions
What are the major factors affecting natural gas prices?
Natural gas prices are mainly a function of market supply and demand. Because there are limited short-term alternatives to natural gas as a fuel for heating and electricity generation during peak demand periods, changes in supply or demand over a short period may result in large price changes. Prices themselves often act to balance supply and demand.
Factors on the supply-side that affect prices include natural gas production, net imports, and underground storage levels. Increases in supply tend to pull prices down, while decreases in supply tend to push prices up. Increases in prices tend to encourage production, imports and sales from storage inventories. Declining prices tend to have the opposite effects.
Factors on the demand side include economic conditions, winter and summer weather, and petroleum prices. (Petroleum fuels may be an economical substitute for natural gas for manufacturers, power generators, and large building owners.) Higher demand tends to lead to higher prices, while lower demand can lead to lower prices. Increases and decreases in prices tend to reduce or increase demand.
Last reviewed: May 2, 2013
Other FAQs about Natural Gas
- Can I obtain a list of companies involved in the natural gas industry, such as utilities, pipeline companies, and storage operators?
- Does EIA have city or county-level energy consumption and price data?
- Does EIA have maps or information on the location of natural gas and oil pipelines?
- How can I choose my natural gas supplier in my state?
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- What are the major factors affecting natural gas prices?
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