Now stick with me here, because once you understand the strange tango between oil and natural gas costs, you’ll be able to understand your bills better!

The Crude Oil Basics

Let’s start with the star of the show – crude oil. You’ve definitely heard about this thick liquid before. It’s the oil that gets pumped out of the earth in places like Texas, Saudi Arabia, and anywhere else that’s sitting on those underground oil reservoirs.

But crude oil is pretty useless in its raw form. This sludge has to go through intense refining at special plants to get transformed into the really valuable stuff like:

• Gasoline – You know, the fuel that powers all our cars, trucks, airplanes, and makes those road trips possible.
• Diesel Fuel – The go-juice that keeps all those big rigs, construction vehicles, and farms operational.
• Heating Oil – For warming up homes and businesses when temperatures get frosty.

The Natural Gas 

Okay, now let’s switch over to natural gas – that other hugely important energy source that plays a major role in all our lives too. Rather than a liquid, natural gas is actually an air-like compound that frequently gets discovered in those same underground rock formations as crude oil.

Unlike crude though, we mostly just use natural gas for a few key things:

• Home Heating – That nice warm toasty feeling you get when cranking up the thermostat in winter? Thank natural gas!
• Cooking Food – The fire heating up your stovetop or oven is typically fueled by natural gas in most homes. 
• Electricity Generation – Tons of power plants use natural gas to crank out the juice that keeps our lights on and devices charged.

How Oil Drilling Impacts Natural Gas (And Your Bills!)

Okay, so now that we’ve got oil and natural gas 101 down, here’s where things get fascinating. Even though they are distinctly different products used for different stuff, their pricing is intrinsically linked through a series of wacky unintended consequences.

You see, despite being separate compounds, crude oil and natural gas very frequently get discovered together in those underground reservoirs where they’ve been trapped for millions of years.

So when companies drill down into the earth, desperately searching for more of that premium crude oil to refine into gasoline and heating oil and such…they also inadvertently pull up boatloads of extra natural gas supplies too!

And here’s where things get interesting from a consumer standpoint.

When Oil Prices Are High = Less Natural Gas Bills 

High crude oil prices motivate those drilling companies to be extra aggressive finding and extracting more and more crude supply. After all, those high oil profits are like striking black gold!!

But with that increased feverish drilling pace, it also has the side effect of producing way more natural gas too from all those oil reservoirs. More overall supply of natural gas inevitably pushes the pricing down for consumers.

When Oil Prices Are Low = Higher Natural Gas Bills

On the flip side, when crude oil prices aren’t looking too hot, drill companies tend to throttle way back on their oil production. Less fresh crude being demanded means fewer new wells getting drilled into the earth.

And with all that reduced oil drilling activity, there’s also less natural gas getting extracted too. A lower overall supply of natural gas leads to less competition, allowing those gas companies to spike pricing higher to cover their own drilling costs and thirst for gas profit!

Other Natural Gas Price Factors

There are some other key elements that can impact natural gas pricing on top of what’s happening in the crude oil world:

• New Production Tech – If innovators find groundbreaking new ways to more efficiently extract natural gas supplies for lower costs, that increased competition can help prices drop.
• Regulations & Policies – Certain government rules and restrictions around things like fracking can open or limit new sources of natural gas supply depending on where you live.
• Emergencies & Disruptions – Any time a major pipeline or terminal goes down unexpectedly due to severe weather or technical issues, it can spike prices by straining overall available gas supplies.
• Consumer Usage – How much natural gas people end up needing on any given month or season also directly impacts real-time pricing based on basic supply/demand fluctuations.
• Overall Economy – How healthy (or not) the broader economy is doing can raise or lower demand for gas-fueled power at factories, businesses, homes, etc.

In Conclusion

So the next time you hear news about oil prices surging or plummeting, you can use that info to anticipate potential impacts for your natural gas heating and cooking needs. More oil drilling tends to mean less expensive gas profit for those utility companies to pass onto you, the humble home consumer.