Why Have Natural Gas Prices Been So Low?

Oct 7, 2016 | Natural Gas

It’s officially fall! And we are thinking about all that fall brings leading in to winter. Energy-wise, it’s interesting to take a look at what this means.

When you look at your electricity bill you may not realize how much it is influenced by natural gas prices. Electricity and natural gas tend to follow the same pricing patterns.

Production, inventory, and demand patterns of natural gas can be revealing and help us understand overall energy prices better.

winter-landscapeThe typical natural gas pattern is that there is a rise in demand in September as cool weathers enters northern parts of the U.S. By November winter weather arrives in most of the country, demand is much higher, and inventories traditionally decrease rapidly and are rebuilt in the spring and summer.

This pattern was not followed last winter season because last winter was the warmest winter on record! Instead of decreasing, gas inventories actually increased until November, 2015, which was an unprecedented event. At the same time, gas production was strong. Throughout the winter the natural gas inventories fell at a much slower than normal rate due to weak demand and strong production and prices remained at all-time lows. So in April, 2016, at the season end, natural gas inventories were at a near record high and prices were at a near record low.

As we went through a hot summer natural gas demand whittled away at the excess gas storage. And we sit on the brink of the next winter season at pretty much normal levels of natural gas inventories and production.

What happens if we have another warm winter? Lower demand would equate to lower storage withdrawals and potentially leave the market with another year of very high inventories. This would leave us with higher inventories at the season end that will be comparable to last year’s.

PointLogic Energy projects that an average winter would leave a 31% lower inventory by April 2017. This would be more normal levels and natural gas (and electricity) prices would be expected to be higher.

All of this means that there is uncertainty on future natural gas and electricity prices. If we have a normal winter, prices will go up. Another warm winter, and prices will remain low.

It’s interesting to note that the Farmer’s Almanac predicts a colder than normal winter with words like “numbing cold and snowy, ice cold and snow filled, freezing cold, chilled-to-the bone and wet.”

You can avoid all this uncertainty now by locking in the current low rates. Let the winter weather do what it will without worry about your energy bill.

Call CES today for a Free Rate Analysis and see how we can save you money. 866-253-9600.

CES President Visits the Grand Ole Opry!

CES’s President, George Clouden, recently attended the annual Direct Energy Summit in Nashville. Direct Energy is one of the largest energy suppliers in the U.S. and CES is one of their top channel partners. At the summit everyone brainstorms about how we can better serve our customers and we share ideas along this line. CES stands out because we have a very knowledgeable in-house Customer Service Department. Direct Energy admires and supports our Customer Service and our customers benefit because they can deal with a live person whose goal is to provide great service and leave the customer happy and glad they are working with CES as their energy broker.

George worked closely with Direct Energy’s Thomas Foster, Indirect Sales Manager, and John Belgiovini, Director of Sales. They managed to have some fun at this summit because it was held at the Gaylord Opryland Resort and Convention center in Nashville.


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About Consumer Energy Solutions

CES was founded in 1999 and over the past 22+ years has serviced everything from small mom and pop shops to fortune 500 companies. We represent the largest and most reputable energy suppliers in North America and have an impeccable track record at securing the lowest rates possible.