Natural Gas (cont)

Demographics

Changing demographics also affects the demand for natural gas, especially for core residential customers. In the US for instance, recent demographic trends indicate an increased population movement to the Southern and Western states. These areas are generally characterized by warmer weather, thus we could expect a decrease in demand for heating in the winter, but an increase in demand for cooling in the summer. As electricity currently supplies most of the cooling energy requirements, and natural gas supplies most of the energy used for heating, population movement may decrease the demand for natural gas for these customers. However, as more power plants are fueled by natural gas, natural gas demand could in fact increase.

Ecomomic Growth

The state of the economy can have a considerable effect on the demand for natural gas in the short term. This is particularly true for industrial and to a lesser extent the commercial customers. When the economy is booming, output from the industrial sectors generally increases. On the other hand, when the economy is experiencing a recession, output from industrial sectors drops. These fluctuations in industrial output accompanying the economy affects the amount of natural gas needed by these industrial users. For instance, during the economic recession of 2001, natural gas consumption by the industrial sector fell by 6 percent.