Winter is here — and for the natural gas industry, it couldn’t come a moment too soon.
The last few winters in the United States have been unseasonably warm, and while the mild weather has been great for most Americans, it hasn’t exactly been a boon for natural gas.
Natural gas prices have remained more or less consistent, hovering between $2.75 and $3.25 per million BTUs for the last several years. But this winter’s plunging temperatures have increased fuel costs, with prices reaching as high as $25 per million BTUs in some markets. According to energy trading experts, the average price could rise to as much as $4 or $5 per mmbtu by the end of winter, leading to a very profitable first quarter for the natural gas sector.
Dreaming of a White Christmas
Following a string of surprisingly sunny seasons, experts predicted that this coming winter would be colder than the national average, particularly on the East Coast. Across the Midwest, snowfall was expected to be sparse in November and December before picking up significantly in later months. Weather patterns vary widely between the states, but forecasts suggested that late January through mid-February would see the heaviest snowfall.
For most people living in four-season states, this news probably came as a slight disappointment. For those in the industry, however, frigid weather promises a lucrative start to what could be a big year, as Americans use more natural gas to power their homes and heating systems. As temperatures have dropped and low prices have driven up demand, drillers and investors are hoping to see big profits.
Forecasting the Future
Even without this winter’s promising weather patterns, recent data suggests that natural gas is well-positioned to continue its upward trend. According to a report published by CoBank in 2015, demand is projected to grow by 25% by 2020, with more than half of that growth coming from U.S. natural gas exports.
The report predicts that many relevant economic trends that are just beginning to surface, such as the country’s newfound role as a leading exporter of natural gas. Outside of growing energy usage, this increase can be attributed in large part to the growth of hydraulic fracturing, which helps supply meet demand while simultaneously driving down prices.
While consumers should take advantage of low prices while they can, natural gas producers should consider investing in a dust control program to keep their access roads running and fully operational this winter. Dust control helps providers manage higher dust emissions with products like EK35® and EnviroKleen®, which seal fugitive dust particles within road aggregate while strengthening the existing surface.
With over forty years of experience in dust control and longstanding relationships with industry-leading energy companies, Midwest Industrial Supply, Inc. can develop a solution that keeps the gas flowing, ensuring high profit margins regardless of the weather.
