One of the most important questions you might ask yourself if you are in the oil and gas industry is what energy costs will be in the future. Nobody can say for sure how the energy market will behave, it is impossible to predict such a volatile market. But there are factors that can affect the future of energy prices. Shale, your oil industry news magazine, offer you factors that affect energy markets.
Weather
During the winter months, when it is cold, the demand for natural gas to heat homes and offices goes up. This demand for natural gas can put upward pressure on prices. If an unexpected cold snap hits the area for an extended period of time, the effect of the prices will intensify because it is more difficult to react to such an increase in energy use in a short period of time. If the transportation of natural gas is already operating at full capacity, the prices could go up if there is a surge in demand. However, if there are natural gas supplies in storage, this could cushion any greater demand.
Tornadoes, hurricanes and other severe weather can affect the supply of natural gas and boost the price. A major snowstorm or cold snap can also negatively affect supply.
Economic Growth
When we are experiencing economic growth, the demand for energy increases. Businesses that are enjoying growth demand more natural gas to ensure their products are made faster.
Maintenance of the Infrastructure
Whether the maintenance of the infrastructure is planned or not planned, it can affect supply and demand that comes through the network.
Political Unrest
Political unrest can play a big part in energy prices. For example, any problems that arise in the Middle East will have a direct impact on energy prices and even on the economy. This happens because in time of unrest, there is an uncertainty in the market.
Trump
President Trump rolled back energy regulations back in March. And while that move is unlikely to spawn a surge in job growth and a quick reduction of fuel prices, it will still affect the industry nonetheless.
Fracking
Fracking helps keep natural gases prices lower by increasing supply. As the availability of any product increases, the price tends to go down.
Natural Gas Prices
Nobody knows why for sure, but when natural gas prices go up, so does the price of electricity. Therefore, the price of natural gas has some sort of affect on the price of electricity.
Storage
The amount of energy we have stored also affects prices. For example, if we gauge the amount of natural gas we have in storage, we can safely predict lower prices as long as other factors like demand and weather don’t occur.
As you can see, there are many factors that can drive energy costs. Many of these factors are out of our control and can occur without warning while other factors we seem to have more control over. If you want to stay abreast of oil and gas industry news, visit Shale.
