Many Factors Create a Volatile Marketplace
When the balance of supply and demand are thrown off kilter, this results in widely fluctuating natural gas prices. Factors that affect prices—especially in a negative way—include weather conditions, international conflict and a growing economy.
Factors Affecting Supply & Demand
Weather conditions, especially unusually cold or hot temperatures, can lead to increased demand for natural gas. Whether natural gas is used for home heating or generating large amounts of electricity, when demand outpaces supply, prices will rise.
During periods of economic growth, demand for energy rises to keep assembly lines moving and plants operating. When we experience economic slowdowns, demand decreases.
But another factor is at play—industrial energy consumers often switch between oil and natural gas, searching for the most economical alternative of the moment. The war with Iraq and the disruption of Venezuelan oil production has raised oil prices. Thus many businesses opted for natural gas because it can often be used instead of crude oil. But that created an increase in demand and subsequently natural gas prices also rose.
About Deregulation
Natural gas is deregulated and traded on the open market, much like oil or gold. Free trade has created a North American market for natural gas and a continental network of pipelines allows gas producers to sell their product where demand is greatest.
We do not produce natural gas; we compete on the open market to purchase gas for our customers here in British Columbia. We manage our gas supply with the aim of reducing the effect of market volatility on our customers.
We try to buy gas at the lowest possible price by purchasing gas from a variety of sources in British Columbia and Alberta. And, when possible, we offer to lock in the price of gas through the use of contracts.
Related Links
The CGA is the voice of Canada's natural gas delivery industry, including local gas distribution and transmission companies, and related equipment manufacturers.
The NGX developed the natural gas trading platform and as such oversees transactions in the Canadian market.
The British Columbia Ministry of Energy & Mines offers this repository of reports, presentations, publications, maps and other information associated with the development of its offshore oil and gas resource.
CAPP is the voice of the industries that explore for, develop and produce natural gas, crude oil, oil sand and elemental sulphur in Canada.
Everything about energy including oil and natural gas, coal, electricity and future energy sources—all in one place.
