Natural gas costs have risen to more than $4, marking an uptick brought about by the anticipation of cold weather, according to experts. As winter sets into the Upper Midwest and other areas of the country, utility needs are anticipated to increase significantly, causing a high demand for the energy source. The figure represents the most sizeable rise in cost since the early summer. Although natural gas pricing can be a volatile business, dropping temperatures can prove a reliable barometer for traders to judge how many units consumers will need.
The expansion of drilling operations across America has caused the general cost of natural gas to compete with fossil fuels. However, following the harsh lessons of last year's record winter weather, experts and traders have become more sensitive and assertive with the unpredictable market. Measured in British thermal units, costs from the winter of 2013-14 reached more than $6 per mmBtu.
"This is precisely what the market has been setting up for, to jump all over any early season cold," John Kilduff, founding partner of Again Capital, an energy commodities investment firm, told the Wall Street Journal. "This blast of cold weather caught everybody by surprise, to a degree, in its severity."
Overall, the recent uptick has seen figures increase 14 percent, a premature jump for analysts who believed winter surges were weeks away. Barring a sudden increase in temperatures, commodities investors have likely turned a corner into the new season.
While the figures appear high, there's hope yet for consumers. Cold winters in the North often yield milder weather in the South, around Dallas manufacturing companies, which limits air conditioning costs and levels out demand. The interconnected web of winter weather patterns in the United States means everyone sacrifices a little money, comfort or sunshine to stabilize the energy market.