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Factors that Impact the Cost of Gas

Factors that Impact the Cost of Gas

Natural gas is a commodity i.e. the price varies based on the supply and demand across the country. There are several factors that influence supply and demand including:

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.

Washington Gas maintains underground natural gas storage fields filled during the summer which allow for the withdrawal of natural gas which supplies approximately 50 percent of our customers’ needs. These steps help protect customers from market volatility, and enable the delivery of natural gas safely, reliably and affordably as a top priority in winter months.
 

Weather

Weather has the strongest impact on gas prices and is also the most difficult to predict. Warmer weather can certainly appease current underlying market conditions; on the other hand, the emergence of a colder-than-normal winter weather outturn has the capacity to do the opposite.
 

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.
 

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