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Factors that Impact Gas Costs

Natural gas is a commodity. And its price goes up and down according to supply and demand across the country. There are several factors that influence supply and demand, such as the economy and weather, and these factors ultimately set the price of gas.

The national factors impacting supply are:

Production
Generally, natural gas production has kept pace with rising demand; however, the national market price of natural gas can increase, sometimes greatly, as a result of short-term supply disruptions.

Storage
Storage levels of natural gas on a national level have a dramatic impact on gas costs. Colder than normal weather, particularly early in the heating season, could cause storage levels to be drawn down at an accelerated pace this winter, further impacting prices.

The national factors impacting demand are:

Weather
Weather has the strongest impact on gas prices and is also the most difficult to predict. Not only do weather conditions in the Midwest impact natural gas prices, but so does weather throughout the country, particularly the eastern U.S. where there is large potential for natural gas consumption.

Economy
Economic factors can cause some industries to lose business to foreign competitors, impacting U.S. industrial production. Decreased industrial demand for natural gas could have a moderating effect on gas prices.