What Affects Natural Gas Prices in Australia
Natural gas makes up a huge part of energy bills, particularly among Australians who use this type of energy for heating, preparing food, and using water. If you are one of them, you must have already noticed the increase or natural gas prices in Australia in the past months. The uncertainty in Europe also raises speculation about further price increases in the future.
For consumers, changes in prices are a matter of concern and most consumers would like to know what affects natural gas prices in Australia.
Factors that affect natural gas prices in Australia
A global crisis may impact natural gas prices, especially when supplies change. Disruption in the supply affects the price of natural gas and may reach record-breaking levels. With the conflict happening in other countries now, Australian wholesale gas prices have already increased as compared to their 2021 level according to the ACCC. From $6-8/GJ, prices have already reached $10-11/GJ. While this already shows an increase, Australia’s prices are still far below the international prices in Europe and Asia.
The strength of the economy affects the prices of natural gas. When the economy is thriving, the demand for goods and services could also increase. The commercial and industrial sectors’ consumption of natural gas could also be higher than usual especially when natural gas is used as a fuel to manufacture products like pharmaceuticals and fertilizers. When the demand is high, the price of commodities also tend to increase.
Severe weather conditions also impact the supply of natural gas. Storms may affect the prices of natural gas as they can disrupt natural gas production. Extremely cold weather is another disturbance that affects the production of natural gas. When the demand for natural gas is high but the product is low due to weather disturbances, natural gas prices also go higher than expected.
For example: you see Queensland going through a chill at the moment and hence more Gas is used up, therefore we have less supply and the costs go up.
Residential and commercial demand
Consumer demand is also one of the factors that influence natural gas prices in Australia. During winter, there is a high demand for heating among residential and commercial consumers. In summer, consumers also tend to use their air conditioning systems more. For natural gas users, these changes in behaviours increase overall demand for natural gas which in turn puts upward pressure on prices. Natural gas prices can intensify, especially if supply fails to compensate for short-term increases in demand.
Different factors affect natural gas prices in Australia and most of them are beyond your control. When natural gas prices are high and you still want to save on energy costs, the best option you have is to compare gas providers in Australia. The prices of natural gas may soar, but by comparing and knowing the best options, you will still be able to get a good price on natural gas. It will also help you evaluate contract types and understand the charges that contribute to higher energy bills.
Need help in comparing natural gas energy providers in Australia? Check out Electricity Wizard’s free energy comparison tool.