There are many facets and influences on energy prices and future market trends. This article aims to outline the recent past, discuss how certain key factors played a role in moving energy rates, and what the future looks like for energy prices in 2024. Whether you are a commercial, industrial, or residential customer looking to lower your energy costs, use this article as a guide for navigating deregulated energy market rates.
Looking Back: 2023 Energy Prices
When considering whether energy prices would rise or fall in 2023 in our previous article, we looked at Winter temperatures, the European energy crisis, LNG exports, and more. As we near the end of 2023, we notice that energy prices in 2023 remained somewhat flat and consistent. See the natural gas price chart from 2023 below:
Although there has been a slight increase in prices since their 2023 lows in March and April, energy prices in 2023 were much lower when compared to 2022. Some of the driving forces behind this decrease included an increase in natural gas production and storage levels. Today, natural gas storage levels are the highest they have been in the past two years:
The Global Driving Forces Impacting Energy Prices
When it comes to electricity and natural gas markets, there are several global factors that influence price. And because nearly 50% of electricity is generated using natural gas as a fuel, these markets are closely correlated with each other. Let’s explore some of the key market drivers:
Global Push For Renewables
Through the U.S., Europe, and other continents, there is a global push for sustainability, renewable energy production, and a trend to move away from fossil fuels. Although renewable energy is better for the environment and can help companies achieve their energy efficiency goals, it is still more expensive compared to fossil fuels. As we move away from natural gas and coal power production, the price of electricity is slowly increasing. On the other hand, the decreasing demand for natural gas to generate electricity is counterbalancing that market.
War & Energy Supply Interruption
Unfortunately, there have been several conflicts over the last few years impacting energy production and supply. First, the Russia-Ukraine war disrupted natural gas supply to Europe, causing an increase in global demand for the fossil fuel. Because Europeans were desperate, they turned to the U.S. for natural gas and even enacted gas price caps in the EU. More recently, the conflict between Israel and Gaza has the world anticipating another energy crisis. Iran is suggesting implementing an oil embargo and encouraging other members of OPEC to do the same. This disruption in energy supply could cause prices to soar.
In the U.S. as the next Presidential elections are near and there is a great amount of anticipation in the air, the outcome of future elections could greatly impact energy futures markets. When a political party holding power is against fracking and the development of fossil fuels, energy futures prices tend to rise. The uncertainty in the market causes energy companies to be hesitant leading to a lack of production and supply. Vice versa, if a pro-fossil fuel administration is elected, then the price of natural gas and electricity could decline.
2024 Energy Prices: What’s Expected To Happen
There is a lot of debate over the forecast of energy prices in 2024. While current prices are rising in the short term, they are still relatively low when compared to energy rates in 2023. With uncertainty around the coming U.S. Presidential election and global conflicts between Russia and the Ukraine, and Israel and Gaza, energy prices are predicted to rise into 2024.
In the oil and gasoline markets, Saudi Arabia’s recent production cuts are causing price forecasts to rise. Furthermore, OPEC+ is lowering its future output targets which is causing energy market experts to predict a rise in oil and gas prices in 2024.
Need Help Navigating Energy Market Prices In 2024?
Our team of energy price experts has over 100 years of combined experience deciphering market data and trends in order to give accurate forecasts to our commercial and industrial customers. If you need help navigating the complex energy markets and making decisions for your business into 2024, contact our team today.