Energy Update - 10/29/2018 (Plain Text Version)
In this issue:
The Ups and Downs of Natural Gas Prices
Cold weather increases demand while severe weather can disrupt supply
Used widely in heating and power applications, natural gas is currently the primary heating fuel of choice for U.S. residential homes. As we head into the winter season, homes and businesses are turning on the heat for warmth and comfort.
If temperatures are colder than anticipated, natural gas prices can vary. Colder-than-normal weather can put upward pressure on prices because supply is often unable to meet short-term increases in demand. In some instances, severe weather may disrupt natural gas supply altogether. For example, in winter 2017, parts of northern Alberta experienced a natural gas supply outage caused by persistent cold temperatures.
Natural gas supply in storage may combat some of the effects of seasonal increases in demand. Storage maintains the reliability of supply needed and can serve as a buffer during unexpected demand surges. Most recently, the U.S. Energy Information Administration reports natural gas inventories are lower than last year during this same period. This deficit could become bullish for prices if production cannot keep up with load demands as we move into the winter months.
Domestic production and demand of natural gas are rising; natural gas consumption in the first half of 2018 averaged 12% greater than the first half of 2017. Due to few comparable alternatives, even small changes in supply or demand can result in large price movements.
To help residential and commercial customers manage their energy budgets during the winter months, WGL Energy Services (WGL Energy) offers a variety of pricing plans, including fixed-price and variable price options.
For information about WGL Energy natural gas solutions, click here.
EIA (2017). Natural gas prices a function of supply and demand. Retrieved October 22, 2018, from https://www.eia.gov/energyexplained/index.php?page=natural_gas_factors_affecting_prices
EIA (2018) Both natural gas supply and demand have increased from year-ago levels. Retrieved October 22, 2018, from https://www.eia.gov/todayinenergy/detail.php?id=37193