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Natural gas is a by-product of fossil fuel formation, mainly decomposed organic matter, deposited into the earth over the past 550 million years.

What is natural gas and liquefied natural gas?

Natural gas is a by-product of fossil fuel formation, mainly decomposed organic matter, deposited into the earth over the past 550 million years. The reserves are deep in the ground near other hydrocarbons like coal and crude Oil. Natural gas is treated and transformed into clean fuel to be used by various industries and products. Natural gas is a versatile fossil fuel used mainly for heating, cooking, transportation, generating heat and electricity.

Liquefied natural gas is a natural gas that has been liquefied for easy transport and storage. Natural gas is a major source of energy, however many places requiring it are far from the gas fields. It is therefore cooled and made into a liquid, with its volume size smaller, it is safer to store and ship overseas. The liquid is non-toxic and colorless. By cooling the gas the actual volume shrinks by 600 times. It will also not catch fire in this state.

Natural Gas Heaters and Natural Gas Power Plants

People now use natural gas heaters for many reasons which are both environmental and financial. These heaters/furnaces are not expensive to maintain; they do not break down often and use the cheapest and cleanest fossil fuel available. Natural gas heaters work well in any home.

Natural gas power plants and how it works: one large power plant can generate enough electricity for about 200,000 homes. The incredible thing is that even the fossil fuel it burns has large amounts of energy. These natural gas power plants burn huge amounts of fuel and every bit is full of power, which is released as heat, the heat spins a machine called a turbine, which powers a generator. Benefits include fewer impurities, less pollution, and with new technology cleaner energy production is being made and for far less expensive than other fuels.

Natural Gas Price

Various factors can affect the natural gas price which include:

  • The impact of seasonal weather including tropical storms and hurricanes.

  • Economic growth: The demand for this resource goes up in a strong economy, with this the price of natural gas goes up.

  • Crude oil price variances: If the price of crude oil goes up, the products produced in the refineries also goes up.

  • Natural gas supply: The reserves kept across the US have a big impact on the price. Reduction in US natural gas inventories signals upcoming mass purchase which drives the demand and the price of natural gas futures higher.

  • Time spreads – when the traders bet on the upcoming season, it could be warmer or colder, creating a higher demand and the price of natural gas increases.

There are also different markets within the natural gas market. A spot market is when the prices represent the supply and demand that day. If there is a shortage, then the prices can become volatile and change rapidly. The futures market is determined mostly by variables on expected supply and demand of upcoming seasons. This tends to be less volatile.

Natural Gas Market

Exchange: NYMEX
Trading Hours: 22:00 – 20:59

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