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 weather (temperatures), economic conditions, and petroleum prices. Cold weather (low temperatures) increases demand for heating, while hot weather (high temperatures) increases demand for cooling, which increases natural gas demand by electric power plants. Economic conditions influence demand for natural gas, especially by manufacturers. Demand may be moderated by petroleum fuel prices, which may be an economical substitute for natural gas for power generators, manufacturers, 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.
Learn more:
- Factors Affecting Natural Gas Prices
- Natural Gas Weekly Update
- Articles on natural gas
- Short-Term Energy Outlook
- Annual Energy Outlook
Last reviewed: May 18, 2016
Other FAQs about Natural Gas
- Does EIA have county-level energy production data?
- Does EIA have energy consumption and price data for cities, counties, or by zip code?
- Does EIA have maps or information on the location of U.S. natural gas and oil pipelines?
- Does EIA have projections for energy production, consumption, and prices for individual states?
- Does EIA publish shale gas and coal bed methane production and reserves data?
- How does EIA calculate the year-ago and five-year averages in the Weekly Natural Gas Storage Report?
- How many gallons of gasoline and diesel fuel are made from one barrel of oil?
- How much coal, natural gas, or petroleum is used to generate a kilowatthour of electricity?
- Which states consume and produce the most natural gas?
- Why am I being charged more for propane than the price on EIA's website?
- How much natural gas does the United States have, and how long will it last?
- How much natural gas is consumed in the United States?
- How much shale gas is produced in the United States?
- What are Ccf, Mcf, Btu, and therms? How do I convert natural gas prices in dollars per Ccf or Mcf to dollars per Btu or therm?
- What are the major factors affecting natural gas prices?
- What can I expect to pay for heating this winter?
- What is the average price of natural gas for U.S. electric power producers?
- What is the outlook for home heating fuel prices this winter?
- What is the volume of world natural gas reserves?
- What types and amounts of energy are produced in each state?