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It is found in deposits below the Earth’s crust, but is considered the cleanest of fossil fuels as extracting and burning it produces the fewest pollutants. As we rely so heavily on natural gas, fluctuations in natural gas prices can have a big impact on both domestic and commercial fuel bills. Understanding natural gas price trends, and how much the fuel is worth in 2020, should help you get a better idea of how natural gas prices affect your fuel bill.
Last updated: February 2021
Natural gas is a fossil fuel that’s used extensively in the UK energy system. It’s used to generate electricity – around 39% of our electricity is derived from natural gas – and it’s also used for heating and cooking in homes across the country.
What’s the price of natural gas right now?
At the moment, natural gas has a global price of 2.90 USD per MMBtu. MMBtu stands for Metric Million British thermal unit. This is the unit traditionally used to measure heat content or energy value. It’s widely associated with the measurement of natural gas in global energy terms.
If the wholesale cost of natural gas goes up, household gas and electricity prices will also go up. If you’re on a variable tariff, you’ll see these price rises reflected in your monthly bill.
Are natural gas prices expected to go up or down?
Like all fossil fuels, our natural gas supplies are finite. This means that they’re slowly running out and soon will disappear altogether. As demand for natural gas grows, and natural gas reserves are depleted, the price of natural gas is likely to rise.
Experts predict that natural gas prices will rise by around 3% per year. In 2020, the average price of natural gas was $2.14/MMBtu. In 2021, it’s expected to cost an average of $3.14/MMBtu.
At the moment, the world has proven natural gas reserves to last around 50 years at current levels of consumption. Countries with the largest known natural gas reserves include:
- Russia – 38 trillion cubic metres</li?
- Iran – 32 trillion cubic meters
- Qatar – 24.7 trillion cubic metres
- Turkmenistan – 19.5 trillion cubic metres
- USA – 12.9 trillion cubic metres
More than ever, our team of experts remain on deck to help you make savings on your energy. We understand how deeply the lives of many are affected by these trying times and we want to support you the best we can. More on your energy supply during COVID-19 in our article.
While it’s very possible that more reserves will be discovered in the coming years, at the moment, we can expect supplies to dwindle for the foreseeable future.
One way in which countries can produce more natural gas is through fracking. Fracking is a process by which water and chemicals are driven into shale rock in order to extract natural gas. Most countries have banned the practice as it’s been shown to be very damaging to the environment. At the moment, only four countries carry out fracking on a commercial scale, these are:
Recent natural gas price evolution & predictions
Over the past 20 years, the wholesale cost of natural gas has fluctuated a lot. While in 2020, the average closing price for natural gas has been just $1.97, in 2008, the figure was $8.86.
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The main factor affecting the wholesale price of natural gas is supply and demand. The more natural gas there is available, and the less demand there is for that natural gas, the lower the wholesale price will be. On the other hand, increased demand for natural gas, and decreased availability, ensure that wholesale prices go up.
One factor that plays a big part in influencing the demand for natural gas is the weather. The warmer the year, the less natural gas households consume and the lower the overall price of the fuel is likely to be.
What is the average monthly bill for natural gas?
As gas consumption varies significantly throughout the year, the amount you spend on the fuel could change considerably from month to month. On average, Brits spend £56 per month on gas. However, if you have a large, draughty home you’re likely to spend a lot more than this, especially during the winter months. Conversely, if you live in a small, well-insulated property, you may well spend a lot less than this every month.
What uses the most gas in a home?
The vast majority of natural gas used in the home is consumed by your boiler. Your boiler uses natural gas to heat water and power your central heating system. During the winter months in particular, your boiler will be working hard to heat your home, using up a lot of gas in the process.
A lot of homes also use gas as a fuel for cooking. If you’re a keen cook, you’ll probably get through a fair bit of gas frying, sautéing and steaming your food. If you have a gas oven as well as a gas hob, you’ll consume even more.
How much is natural gas per kWh?
The amount you’ll pay for a kWh of natural gas will depend on your supplier, your tariff and your location. On average customers in the UK pay 3.80p for a kWh of gas.
Would you like to know more about comparing energy prices? Great! Here are some more related articles:
- Compare electricity prices
- Average electric bill
- Cheapest electricity
- Average gas bill
- Cheapest gas supplier
- Compare utility bills
Updated on 24 Feb, 2021