Natural Gas Market

The natural gas market is similar to other competitive commodity markets: prices reflect the ability of supply to meet demand at any one time.

When demand for natural gas rises, prices rise accordingly. Producers respond by increasing their exploration and production capabilities to match the stronger demand.

What causes gas prices to rise?

Natural gas prices in the producing regions of North America are determined by the competitive forces of supply and demand. The short-term or spot price fluctuates daily due to several factors including weather and short term disruptions. For instance, a hurricane in the Gulf of Mexico, or a snap deep freeze in Western States, two of the largest gas producing regions, can affect the short term price of natural gas.

Longer term gas prices are determined by population and economic growth and by factors such as environmental polices. For example, greater demand for gas as an environmentally-preferred fuel for electricity generation could result in increased gas.