What Impacts the Energy Markets?
With so much happening across the globe and at home, it’s normal to have questions about the impact of current events on the energy markets — and your business’s energy bills.
The reality is, there are several variables that impact the energy markets, pricing, and how to best mitigate risk. Let’s take a look at the most significant factors.
Key Factors Impacting the Energy Markets
Supply and Demand
When it comes to what you’ll pay for your energy, what’s most significant is simple supply and demand — and the factors affecting this dynamic. These include:
- Natural gas production and storage levels
- Renewable generation output
- Energy infrastructure buildout
- Energy exports, notably liquefied natural gas (LNG)
- Increasing power demand from artificial intelligence (AI) and data center growth
- Variations in winter and summer weather
Storage is a key consideration: In the last decade, domestic production of natural gas has grown substantially, and storage volume hasn’t kept pace. The volume of gas in underground storage fields has a considerable influence on the overall supply/demand balance, as this storage helps meet daily and seasonal changes in demand. On the power side, we don’t yet have the mechanisms to store electricity on a wide scale. In turn, power prices tend to rise with the price of natural gas but remain volatile for longer. Until the industry builds out more storage, we’re going to continue to see market volatility.
Energy Production, Infrastructure, and Transmission
The price of fossil fuels is tied to the extraction, processing, and transportation of these fuels, while technological advancements in renewable energy continue to influence energy prices as well. Broad investments in the U.S. power grid and natural gas transmission infrastructure also contribute to energy pricing. These expenses vary based on location, population density, and the quality of the energy distribution network. How quickly this infrastructure is built out is often influenced at the state and local level, even if related policy comes from the federal level. Additionally, the U.S.’ steady growth of LNG exports will continue to affect prices.
Geopolitics
Global conflicts, sanctions, and trade agreements can have a significant impact on energy pricing. Political instability in major energy-producing regions can disrupt supply chains and lead to price volatility.
Extreme Weather
Historically warm winters and summers have led to volatility in the natural gas markets and an increase in demand for electricity needed to cool homes and businesses. Summer 2026 is currently forecasted to be hotter than average, according to the National Oceanic and Atmospheric Administration (NOAA)’s Climate Prediction Center, with the possibility for a “Super El Niño” event later in the year.
The Bottom Line: Lean on the Experts for Informed Decisions
Your best bet is to partner with an energy supplier who has access to information and market resources — and experience with market volatility. The IGS Energy team is here to assist customers in navigating market risks and opportunities and craft forward-looking, long-term strategies that align with a business’s goals.