4 Factors That Affect Natural Gas Prices and Home Heating Costs
Rising home heating costs can cause Illinois homeowners to feel the pressure as brisk weather sets in. The Wall Street Journal reports that natural gas prices continue to rise as property owners across the country prepare for a colder-than-average winter. Understanding the factors that affect these prices can help homeowners keep their heating bills under control so they have money to save for their future.
Annual Weather Patterns
The U.S. Energy Information Administration explains changes in weather patterns that are expected to last throughout the season can significantly impact demand. For example, the winter season beginning in December 2013 was especially cold for much of the country. Residential heating fuels were more in demand because of the colder weather. It’s expected that December 2014 will kick off another unusually cold winter.
Natural disasters that occur in areas heavily involved in production can affect supply. Strong hurricanes that have been known to occur along the Gulf Coast are especially harmful to production. It can take up to a year for wells to be repaired enough to allow for production volumes to return to normal.
This impact on prices was demonstrated after Hurricane Katrina impacted production along the Gulf Coast in 2005. Supply for the entire country decreased by 4 percent for nearly 10 months.
Fluctuations in the economy have the potential to impact natural gas prices. A strong economy will lead to a greater demand for this natural resource. People who may have had to limit their purchase of home heating fuels in the past because of limited income are more likely to increase the amount that they purchase when household income is more stable. This increase in demand drives the price of the natural resource up.
On the other hand, an economy that’s experiencing a recession will lead to a decrease in demand. People need to stretch their budgets, and home heating fuels may be cut to make room for other necessary expenses. This decrease in demand leads to a lower price.
While homeowners may face high costs and a construction project when they want to switch to a different heating source, large consumers of natural resources have the option to switch between sources including coal, oil and gas. A drop in the cost of coal or oil could cause these large consumers to switch to these heating sources. The result is a lower demand for gas, and lower prices will eventually follow.
How can homeowners keep their heating costs under control when cold weather drives demand for fuel sources? Greater efficiency is a solution for this problem. Experienced technicians are able to provide maintenance services that pinpoint problems in a heating system. Ray’s HVAC has been helping Illinois homeowners keep their families safe and comfortable since 1956. Contact a friendly representative to find out more about keeping natural gas consumption under control or to schedule an appointment.