The People of America's Oil and Natural Gas Indusry

Did You Know? Econ 101

Jane Van Ryan

Jane Van Ryan
Posted August 31, 2009

Did you know that the laws of supply and demand have a huge impact on energy costs?

As the Associated Press reported on Aug. 27, the price of natural gas fell to its lowest level in seven years last week after the Energy Information Administration reported that underground storage areas are filling up. In trading last Thursday, natural gas prices dropped to as low as $2.692 per 1,000 cubic feet--the lowest price since August 7, 2002.

The cause: Manufacturers have been cutting back their production and reducing their consumption of natural gas. It's Econ 101--ample supplies and low demand tend to put downward pressure on prices.

The recession has had a similar impact on gasoline prices. Last week the price of gasoline was more than $1.00 cheaper than at the same time last year.