The United States is currently the world’s largest producer of natural gas, producing over 41 trillion cubic feet in 2023 alone. However, supplying natural gas to businesses is rife with challenges. Despite its rising popularity and the millions of miles of piping installed to transport it, natural gas remains a complex commodity to get to end users. That’s because there are numerous challenges in getting it from Point A to Point B, including limited infrastructure, supply chain shortages, and a volatile market.
Still, commercial businesses depend on a reliable and consistent supply of natural gas to power their daily operations and stay efficient. While many of these factors are difficult to control, working alongside the right energy supplier can help businesses overcome these logistical challenges.
How Natural Gas is Supplied to Businesses
Natural gas is transported throughout the United States via a sophisticated network of underground pipelines, covering millions of miles. Supplying natural gas is a complex process, dependent on numerous variables that drive price and supply.
The process is distilled into four steps:
- Extraction: Energy exploration and production companies drill for and extract natural gas from deposits within the earth’s crust.
- Purification: Once extracted, water, sand, and other impurities are removed from the natural gas. The resulting processed natural gas is referred to as “consumer-grade” or “dry” natural gas.
- Distribution: The millions of miles of underground pipeline are put to use as processed natural gas is transported through them to utility companies and suppliers.
- Delivery: Finally, the natural gas is supplied to the commercial businesses and residences that need it.
5 Challenges of Supplying Natural Gas to Commercial Businesses
When it comes to natural gas supply for commercial businesses, margins are always uncertain. This is because the price and volume of natural gas supplied are dependent on numerous political, economic, and environmental factors.
Although ever-present, these challenges are ever-evolving, constantly developing outside the control of the very businesses that rely on natural gas to power their daily operations.
The most persistent challenges affecting the supply of natural gas include:
- Market Volatility
- Increased Energy Costs
- Limited Infrastructure
- Supply Shortages and Disruptions
- Regulatory Compliance
Market Volatility
This is where the age-old Law of supply and demand comes into play.
The price of natural gas (usually calculated per 1,000 cubic feet) fluctuates constantly. While demand is always high, the cost of natural gas depends on the supply’s ability to meet that demand.
Weather conditions, such as hurricanes or floods, and various geopolitical factors, including trade disputes, sanctions, and shifts in energy consumption patterns, also impact the pricing of natural gas in ways that are difficult to predict and prepare for.
An unpredictable market makes it challenging for commercial businesses to align their energy costs with their budgets and consumption rates.
To learn more about Natural Gas pricing trends and how natural gas is traded, refer to this page on NYMEX Natural Gas Futures Contracts.
Increased Energy Costs
Natural gas costs rise for the same reasons that they tend to fluctuate; given current economic conditions in the United States, steadily rising prices are likely to continue. Demand increases that outpace supply, and severe weather events also contribute to high energy costs, factors that are difficult to predict or control.
Limited Infrastructure
The natural gas supply chain is only as reliable as the infrastructure that supports it. Pipelines, facilities, including liquefaction plants, and other essential components of the natural gas supply can be vulnerable to disruptions, including environmental factors.
When infrastructure is limited, either due to external factors or a lack of facilities, it becomes difficult to adapt to changing market conditions and ever-rising demand. These constraints often lead to increased prices, inefficient delivery, and shortages.
Supply Shortages and Disruptions
Economic instability and geopolitical events can also lead to supply chain shortages and disruptions.
Enter the Law of Supply and Demand again.
If there’s a break or disruption to the supply chain, shortages may contribute to price hikes and operational difficulties. Even inclement weather can be a decisive factor in determining how natural gas supply meets demand and at what price.
Regulatory Compliance
Like any industry, the natural gas sector is subject to stringent federal and state regulations, ensuring companies operate responsibly regarding safety, transportation, and environmental protection.
While these regulations are essential, they can be costly to follow and require a proactive approach to maintain compliance, given constant changes and updates. Regulatory changes often introduce new operational costs in the interest of compliance and safety.
Controlling Supply Challenges With EnergyMark
While many of the challenges facing the supply of natural gas for commercial businesses can’t be entirely circumvented, choosing the right energy supplier can make a big difference in how well a business contends with them.
Despite a volatile market, rising costs, supply chain insecurity, and other logistical challenges, partnering with EnergyMark helps companies manage their natural gas expense and anticipate future economic and regulatory changes.
EnergyMark is also an energy supplier. Our consultation and management services help keep these costs low.
Energy Supply
EnergyMark supplies natural gas to businesses across New York State and Pennsylvania, just like utility companies, but at a lower price.
That’s because we buy energy directly from producers, eliminating the taxes and fees that utility companies charge on top of the gross cost of the energy they deliver.
Energy Management and Consultation
Once a business’s natural gas is supplied at our competitive rate, our energy management and consultation services help keep energy costs down by monitoring consumption and developing long-term, custom solutions tailored to the specific needs of each business.
We develop close, collaborative relationships with businesses to help stabilize their energy costs and manage their consumption, all while ensuring they can operate efficiently and effectively.
Want to learn more? Check out our Energy for Business resources.
Stabilize Your Energy Costs with EnergyMark
Natural gas supply can be costly and volatile – no business should navigate these logistical challenges alone. EnergyMark can help stabilize your energy costs without sacrificing the natural gas supply your business needs to stay effective, efficient, and competitive.
Our consultation and management services can identify areas for improvement, streamlining your energy consumption to anticipate future price increases and regulatory changes.
Contact us to discover how we help businesses reduce their energy costs.
