Recent extraction methods and a desire for reduced carbon dioxide emissions has led many energy companies to invest in natural gas. Additionally, the fossil fuel has been lauded for being inexpensive. However, recent disruptions throughout the procurement process has raised the overall price of the resource.
Factors of hindrance
According to the U.S. Energy Information Administration, natural gas futures continued to rise this past week after supplies rose by 49 billion cubic feet, which is slightly more than what market analysts expected. Total stocks now stand at 899 billion cubic feet, up 831 billion cubic feet from the previous year and 1.01 trillion cubic feet below the five-year average. Over all, the resource stands at $4.74 per million British thermal units, increasing by 1.5 cents before the EIA's data was added.
Though supplies are rising, the speed of which the resource is being produced is hindered by the residual effects of the 2013-2014 winter. In an interview with MarketWatch, energy futures specialist Tim Evans noted that conditions could improve over the summer if the Gulf of Mexico experiences a quiet hurricane season.
In addition, numerous accidents involving natural gas production and refinery facilities are raising the prices of the resource. The Christian Science Monitor noted the explosion of a natural gas processing plant in Opal, Wyoming, earlier this month. The structure gathered about 1.5 billion cubic feet of gas a day, sending refined materials into pipelines that fuel urban centers throughout the United States.
A better view of procurement
For city utilities and power providers throughout the nation, it may be in their best interests to weigh the pros and cons of outsourcing to companies that can provide them with an improved perception of their natural gas suppliers. In light of the accident that occurred in Wyoming, it's important that procurers of the fossil fuel know which facilities exercise stringent safety measures that prevent such disasters from occurring.
Additionally, it's imperative that enterprises within the energy industry acquire materials from natural gas extractors that employ best practices. A study published by the National Academy of Sciences found that methane leaks are a frequent occurrence in natural gas production.
Supplier relationship management tools may be able to help those making use of the fossil fuel to determine which organizations are exercising best practices. Such considerations are important for both their public image (as methane leaks are harmful to the environment) and reducing the cost of procuring the materials.