Demand and prices are expected to rise with changing energy sources and a improving economy
Los Angeles, CA (PRWEB) February 20, 2015
The natural gas market has a buyer power score of 2.4 out of 5, indicating low buyer negotiating leverage. Highly volatile pricing trends due to input cost fluctuations and growth in demand, and the low availability of substitutes have significantly reduced buyer negotiation power, according to market research firm IBISWorld. Moreover, natural gas is essential to a number of purposes, including in cooking, industrial applications, heating, power generation, as fuel for transportation and to manufacture fertilizers. To this end, suppliers generally do not need to be flexible with pricing because demand is high and steady.
Although overall market concentration is low, major players in the natural gas market often monopolize entire regions. As a consequence, a limited choice of suppliers hinders buyer power; however, buyers may benefit from the cost savings associated with direct pipeline delivery. Large players may also be vertically integrated and can forgo the wholesaler middleman by processing and delivering their natural gas products via pipeline to their large-volume customers. As a result, IBISWorld research says low-volume buyers and those that do not have their own pipeline delivery systems end up paying more per thousand cubic feet than their larger counterparts. Current vendors include Exelon Corp., Pacific Gas & Electric Co. and Dominion Resources Inc.
High volatility in pricing negatively affects buyers because fluctuations may subject them to sudden price increases. To hedge against risk, buyers should enter into contractual agreements now to lock in current rates. To further protect themselves, buyers should also consider integrating terms in the contract that place some restrictions on when the supplier can increase the price, such as when production costs rise. For more information, visit IBISWorld’s Natural Gas procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of natural gas. Natural gas is a type of fossil fuel and is a nonrenewable resource. It can come in liquefied (LNG) or compressed (CNG) forms. Suppliers provide natural gas to buyers for use in heating, cooking and power generation, as well as for fuel in transportation and manufacturing fertilizers. This report excludes other types of energy sources, such as oil, coal, nuclear and solar energy, and does not include gasoline.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.