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 heating fuel and as a fuel for electricity generators 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 and imports and sales from storage inventories, and 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.
For a detailed discussion, see:
- Factors Affecting Natural Gas Prices
- EIA's latest Short-Term Energy Outlook
- EIA's Annual Energy Outlook
Last reviewed: April 10, 2012
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?
- How does EIA calculate the year-ago and five-year averages in the Natural Gas Weekly Storage Report?
- How much coal, natural gas, or petroleum is used to generate a kilowatt-hour of electricity?
- How much does it cost to produce crude oil and natural gas?
- How much natural gas does the United States have and how long will it last?
- How much natural gas is consumed (used) in the U.S.?
- What are Mcf, Btu, and therms? How do I convert prices in Mcf to Btus and therms?
- What are the major factors affecting natural gas prices?
- What is the average cost of natural gas used for electric power generation?
- What is the outlook for home heating fuel prices this winter?
- What is the total working gas capacity in underground natural gas storage?
- What is the volume of world natural gas reserves?
- What percentage of homes in the U.S. use natural gas?
- What types and amounts of energy are produced in each state?
- Where are the historical spot prices for natural gas?
- Where can I find international prices for natural gas?
- Where can I find shale gas and coal bed methane production and reserves data?
- Where is the boundary for state and federal offshore oil and gas production?
- Which states consume and produce the most natural gas?
- Why am I being charged more for propane than the price on EIA's website?