Factors impacting natural gas prices in 2015

BY Allconnect | Thu Jan 22, 2015
Factors impacting natural gas prices in 2015

2014 was a huge year for natural gas, in no small part thanks to developments in shale drilling technology and a relatively mild winter. These two factors hold a heavy influence over natural gas prices heading into the new year, making it easier to predict how costs will fluctuate in 2015. The coldest weeks of the season may very well be in front of us. As a result, it behooves consumers to keep a close eye on indicators that hint at when natural gas costs will spike, flatten out or continue with steady growth. For example, with lower temperatures around the corner, this may be a key time to take advantage of cheap natural gas from your utility provider by upgrading appliances. This guide to gas prices in 2015 will help you prepare for the rest of winter and beyond.

Falling oil costs a big influence on natural gas
The recently released Short-Term Energy Outlook from the U.S. Energy Information Administration forecasts good signs for gas prices in the coming year. The report predicted that prices will drop from an average of $4.51 per MMBtu in the winter of 2014 to an average of $3.86 per MMBtu in 2015. But where is this price change coming from, and how will the drop in unit costs impact the average consumer’s power bill? According to The Plain Dealer, many of the answers to these questions are dependent on the status of the country’s crude oil production.

Energy Information Administration representative Adam Sieminski noted in a statement that with the cost of crude oil reaching record-breaking lows, more companies are scaling back their exploratory drilling plans to avoid overstocking their supply. This trend has been escalating for years, and some companies have switched some of their resources to natural gas projects in order to stay relevant with the market. With natural gas becoming an increasingly lucrative option for power companies and the massive amounts of natural gas being produced domestically, the resulting room for competition has helped to keep prices low for customers.

Rise of gas-powered vehicles creates greater demand
Not all news regarding changes in natural gas prices translate to to cost breaks for consumers, but it’s important to keep track of these trends regardless to avoid being blindsided by higher monthly rates. For instance, Forbes recently predicted that demand for natural gas powered vehicles is set to explode in the coming years. The resource pointed out that both ownership of gas-powered vehicles and freight transport demand are expected to rise in 2015, resulting in a natural increase in natural gas consumption. If this trend takes off and more natural gas is expected to be diverted to fuel cars and trucks, homeowners may see their monthly bills begin to creep up again.

New regulations may bump consumer prices
Another source of slightly higher gas prices may also be inbound from Washington D.C. Looking to curb the release of methane into the atmosphere, President Obama recently announced new regulations that will set oil and natural gas industries on a path to cut emissions by 45 percent over the next ten years, said The Washington Times. The influx of costs that come with companies adjusting to meet fresh regulations is typically passed onto customers, so you might see incremental bumps to your gas bill as your utility company aims to become more sustainable. By paying close attention to your gas bill, you’ll be able to track when these price changes begin to take affect.

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