Cold Weather May Lead to Higher Oil, Natural Gas Costs

Source: AccuWeather

he first wave of frigid temperatures will move out of the Northeast over the weekend, bringing moderation in temperatures to much of the Northeast and Midwest. Another punch of cold air could soon return, according to Paul Pastelok, AccuWeather senior meteorologist.

The recent cold wave that swept through the Midwest, Northeast and Ohio Valley regions could mean an increase in natural gas and oil prices for consumers.

Winter weather conditions play a role in the fluctuation of natural gas and oil prices.

“The number one driver of natural gas prices is the demand caused by winter,” the director of Media Relations for Chesapeake Energy, Jim Gipson said.

According to Gipson, the natural gas prices have nearly doubled since the summer of 2012.

“Behind winter weather playing a role in increased natural gas prices, companies have also started replacing their electric-generating facilities from coal to natural gas,” Gipson said.

The switch from coal to natural gas cuts back on greenhouse gas emissions and causes an increase in demand, according to Gipson.

Equitable Gas Company has new prices that went into effect starting Jan. 1 and will last until March 31. Equitable gas quotes prices quarterly due to the fluctuation of natural gas prices, according to Scott Waitleverph, communications manager for Equitable Gas Company.

“Customers are experiencing lower prices right now because of the increase in supply, less severe weather patterns and lower demand,” said Waitleverpch.

He also said that 1 MCF (1,000 cubic feet) of natural gas costs $6.05.

“A natural gas customer that uses 90 MCF is saving more than $1,900 a year compared to 2008,” said Waitleverpch.

However, with the expected cold weather the next couple of weeks, Waitleverpch said that there could be a slight increase in the price of natural gas.

Oil prices could also see an increase due to colder weather.

“Timing of weather, transportation costs and inventories are the three factors that will contribute to prices,” Pastelok said.

Katie Sullivan, a Scranton resident, uses oil to heat her home. Sullivan said it is an expensive source of energy, and she keeps her house at 62 degrees to conserve oil throughout winter.

Although Sullivan said that prices are comparable to last year, roughly $3.50 a gallon, she has to fill up her tank about three times every winter.

“If I had to choose an alternative source of energy, I would go with natural gas or electric, just because of how expensive oil is,” she said.

With changing weather conditions over winter, we can expect to see a change in prices.

“Timing of weather, transportation costs and inventories are the three factors that will contribute to prices,” Pastelok said.

People who use natural gas and oil have really lucked out, according to Pastelok because of the colder weather that have come later in winter.

“Timing of cold is a good thing for pricing,” he said.

Gipson also agrees that whether the price of natural gas increases or decreases depends on how long it stays cold in major cities.

AccuWeather Senior Meteorologist Joe Lundberg said that the cold weather pattern as a whole could last into February.

“These temperatures could feel wickedly cold in some places,” Lundberg said.

“This [cold weather] is not unusual; [we] just haven’t seen it in the past few winters,” he said.

Lundberg suggested that, in order to stay warm, “Dress in layers. As far as energy uses, set your thermostat a little lower to extend natural gas but not too low. Protect your pipes; they could freeze in this type of weather.”

With this round of cold weather ending this weekend, Pastelok said that we can expect to see another wave of frigid temperatures around Groundhog’s Day.

“It will affect a big area and last a longer time, possibly seven days,” he said.