People who are familiar with energy rates know first-hand how volatile natural gas prices can be. However, what’s the precise reason behind the constant fluctuation of the price of natural gas so often? Check out some of the major factors affecting the natural gas prices in India:
- Impact Of Weather
Seasonal weather, including hurricanes and tropical storms, can have a massive impact on natural gas production. This supply-side forces refineries to decelerate or completely shut down production during periods when weather events lead to a threat to employees and facilities. The natural gas inventory forecastis observed on the weekly basis, including the streaming price, news, in-depth analysis, and outlook. Weather that influences travel, including blizzards and heavy rainfall, can also impact pricing because of artificial scarcity led by delayed natural gas deliveries.
- Economic Growth
With the swift growth of the economy, the price of natural gas increases too. In a powerful economy that displays extraordinary growth, especially in industrial and commercial sectors, demand for these resources spikes. Most companies experience an increase in demand for their services and products, which in turn raises the demand level of natural gas as a power source. As more economic industries demand natural gas, the price constantly increases.
- Crude Oil Price Fluctuations
Crude oil prices can impact the usage and price of natural gas in ways that coal or other home heating oils can’t. Moreover, when the price per barrel of crude oil increases, so does the rate of the products manufacturers and refineries generate from it, like gasoline. So, when gasoline rates rise, consumers try to adjust their travel plans and purchasing strategies. They may go on fewer vacations, take shorter tips and spend less when they do.
- Increased Competition Among Resources
Uses of natural resources among various energy firms and industrial operations change continuously based on availability and price. Generally, such companies strive to leverage the most affordable natural fuel source to handle their own production expenses. Due to the interrelated nature of fuel markets like natural gas, oil, and coal, an interest in any one of them leads the price down for the rest. For instance, a sudden shift by electricity firms to coal typically reduces natural gas and oil demand. Thus, as demand lowers, so does the pierce. Due to the massive volume connected with natural resource consumption, even a tiny decrease or increase in price can have a recognizable effect on demand.
- Natural Gas Storage
Truth be told, if there is an increase in the natural gas inventory or expected more than usual, it pimples weaker demand and is downbeat for natural gas rates. Referred to as storage levels, such underground field locations are a major link in the supply chain for offering natural gas utility companies, homes, and businesses throughout the year. So, an uptick in fees connected with storage levels can lead to a corresponding rise in natural gas rates. Supply and demand also impact storage requirements. Therefore, lower demand for natural gas means more time in storage, causing prices linked with maintaining storage levels to increase rapidly.
- Natural Gas Supply
Generally, natural gas reserves kept in storage levels in India have an exceptional current impact on natural gas prices. Without sufficient reserves to meet demand during peak usage periods, increased scarcity stimulates natural gas companies to push production to refine more usable gas. As production increases, connected resources rates, including machinery upkeep, fuel, and employee wages, also increase. Most consumers and businesses feel the effects in the form of increased natural gas prices.
Though there could be other reasons to impact the natural gas prices, these are some of the most common reasons affecting the price in India.