Supply and demand
Supply and demand dynamics in the marketplace determine the short term price for natural gas. However, this can work in reverse as well. The price of natural gas can, for certain consumers, affect its demand. This is particularly true for those consumers who have the ability to switch the fuel which they consume. In general the core customers (residential and commercial) do not have this ability, however, a number of industrial and electric generation consumers have the capacity to switch between fuels. For instance, when natural gas prices are extremely high, electric generators may switch from using natural gas to using cheaper coal or fuel oil. This fuel switching then leads to a decrease for the demand of natural gas, which usually tends to drop its price.