How Rising Natural Gas Prices Are Impacting Electricity Costs in Texas

Why Natural Gas Prices are Rising?

Natural gas prices have been on the rise due to a combination of factors, including economic growth, extreme weather conditions, and shifts in global energy demand. These elements contribute to higher costs for consumers and businesses alike.

Let’s take a wider look at them.

1. Economy

When the economy grows, so does the demand for energy. As industries expand and businesses scale up, natural gas consumption rises, especially in sectors like manufacturing, steel production, and pharmaceuticals, where it’s used as both fuel and raw material.

A booming economy means more factories, more commercial activity, and ultimately, more energy demand. This results in higher natural gas prices, which trickle down to electricity costs, and impact both businesses and consumers.

2. Climate Change

Hurricanes, storms, and freezing temperatures can seriously influence natural gas production. In 2005, Hurricanes Katrina and Rita caused major supply disruptions in the Gulf of Mexico, leading to sharp price spikes.

However, since the Gulf’s share of U.S. natural gas production has dropped from 25% in 2001 to just 2% in 2022, hurricanes now have less of an effect on prices.

Cold weather, on the other hand, is still a big problem. Freezing temperatures can slow down production by affecting pipelines and equipment. When this happens during peak winter demand, prices can rise quickly, making electricity and heating more expensive for everyone.

3. Extreme Temperatures of Summer

When temperatures rise unusually high, natural gas prices tend to follow.

As air conditioning use spikes in homes, buildings, and commercial spaces, the electric power sector’s demand for natural gas increases. During peak demand periods, if supply is limited, market prices can rise sharply.

Higher summer consumption reduces the amount of gas stored for winter, leading to lower reserves and potential price hikes when heating demand surges. This cycle makes natural gas prices unpredictable, affecting both businesses and consumers.

4. Large Scale Consumers

Industries like power plants, steel mills, and paper factories use massive amounts of fuel and often have the flexibility to switch between natural gas, coal, and petroleum based on cost. When coal or oil prices drop, some industries move away from natural gas, reducing their demand and keeping prices lower.

But when competing fuel prices rise, businesses shift back to natural gas, driving up demand and prices. However, fuel-switching flexibility has declined in recent decades, meaning industries are now more locked into their energy sources, making price swings less predictable.

How do Natural Gas Prices Affect Electric Bills?

Most Texas households rely on electricity for heating, with 61% using it as their primary source, far higher than the 39% national average.

Even homes with natural gas heating (35%) still depend on electricity to power furnaces and distribute heat. That means when natural gas and electricity prices rise, Texans feel the impact on both fronts.

Electricity costs are directly tied to fuel prices. When natural gas becomes more expensive, power plants pay more to generate electricity, and those costs get passed down to businesses and homeowners.

Utilities that buy power from generation and transmission cooperatives (G&Ts) must adjust their rates to cover rising fuel expenses, making energy bills climb.

You can’t control market prices, but you can lower your electricity costs by using energy wisely. Simple energy-saving habits can help keep your bill manageable, even as prices stay high.

7 Simple Ways to Lower Your Electricity Bill

Here are a few easy ways to reduce energy waste and cut costs:

1. Power Down When Not Needed

This may seem simple, but idle devices like computers, monitors, and printers still use power when left on. Switching them to sleep mode or turning them off overnight prevents unnecessary energy costs

Assign someone to do a quick nightly check and shut down unused equipment. The same applies to breakroom appliances like microwaves, coffeemakers, and TVs. A handy trick is plugging them into a single power strip so you can switch everything off at once before leaving.

2. Get an energy audit

To lower your energy bill, start by understanding how your business uses electricity. Check your monthly kilowatt usage, note peak and off-peak hours, and track seasonal changes. You can do this yourself, assign it to an employee, or hire an energy consultant.

Talking to qualified auditors at Electric Cowgirl is always better as they show accurately where your money goes, spot inefficiencies, and help cut costs. We also provide custom solutions to help businesses cut energy expenses and understand how they use energy.

3. Make the Most of Natural Light

Open the blinds in your workspace and use skylights or other daylight sources to cut down on artificial lighting during the day. Also, check for areas that may be overly lit and remove any unnecessary lighting to save energy.

4. Replace Old Blubs with CFL or LED Ones

Replacing a single 60-watt bulb with an 18-watt energy-efficient one can save over $1 per month if used for 10 hours daily. Now, multiply that by a year. Then consider the hundreds or even thousands of bulbs in your business. The savings add up quickly.

Energy-efficient bulbs don’t just lower your electric bill; they last longer, too. They consume at least 75% less energy and can last up to 20 years. That is 50 times longer than standard incandescent bulbs.

5. Use Motion Sensors and Dimmers

Lighting makes up 17% of electricity use in commercial buildings. Making small changes to when, where, and how you use lighting can lead to significant savings.

Install motion sensors in hallways, meeting rooms, and other areas where constant lighting isn’t necessary. Automatic dimming controllers can also help by adjusting brightness based on actual light levels.

6. Install a Programmable Thermostat

According to the US Department of Energy, setting your smart thermostat to 68°F in winter can cut yearly energy costs by 10%.

A programmable thermostat helps by automatically adjusting temperatures when the office is empty, such as on nights, weekends, and holidays. Set it to turn heating or cooling on 30 minutes before employees arrive and off 30 to 60 minutes before they leave.

During warmer months, keep the thermostat at 77°F or higher during office hours to save energy. In cooler months, set it no higher than 68°F.

7. Upgrade to New Equipment

Upgrading old equipment can help save energy. Replacing outdated printers with newer models is a good start.

If you’re replacing a desktop, consider using a laptop with a large monitor and an external keyboard for better efficiency.

Older buildings may also struggle to handle modern electrical demands, requiring additional circuits or a panel upgrade for safety and efficiency. To keep your electrical system running safely, schedule an inspection with a professional electrician.

Get Expert Help with Energy Costs

Keeping track of energy rates and finding the best plan can be overwhelming.

That’s where The Electric Cowgirl comes in. As a trusted commercial energy broker, we help businesses and homeowners secure the best energy rates and avoid costly pricing mistakes.

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