Will Natural Gas Supplies Cause a Problem for NJ Homeowners?

There are a number of factors that influence the price that New Jersey homeowners pay to heat their homes. The economy principle of supply and demand arguably plays the most critical role. When energy supply is high and demand is normal, energy prices will typically fall or be stable. When supplies are low, that means that each gallon of oil or each therm of natural gas becomes that much more valuable, and prices will typically rise.

Heating oil prices drop

Increased heating oil supply this winter led to falling prices

Just this past winter, we saw heating oil prices fall dramatically. Even though demand for heating oil was higher than normal due to the colder winter, prices fell. Why? Because supplies for heating oil (and all petroleum) were very strong. The United States had more oil than the demand called for. So prices fell. This was good news for NJ homeowners and good news for NJ fuel dealers as well.

What about natural gas supplies?

As we look ahead, there are signs that natural gas supplies will be squeezed. According to a recent article in The Examiner, the United States is preparing to begin exporting massive amounts of natural gas overseas. When supply decreases and demand stays the same, prices typically increase. If demand increases, prices typically spike. This does not bode well for New Jersey homeowners who heat their home with natural gas.

To read more about natural gas exports and the expected decrease in domestic supply, click here.