With Oil Prices Increasing, is it Time to Switch to Natual Gas?

With oil prices increasing at an exponential due to increasing, there is a decreasing oil supply and reserve leading to increased prices. With the region in affect, New England, there has been a close to equal price between both products. Since the late half of the decade, there has been a decrease in households that heat with oil to a change to houses now being heated with natural gas. The difficulty in this is the cost that it takes to convert from an oil heating system to a natural gas system, a cost between $4,000 and $6,000 dollars (Freeman). Oil prices have risen from $62 dollars a barrel to $103 dollars a barrel in he pasty year. This increase has the affect of saving more than $1500 dollars in the winter months, if using natural gas. The oil supply is increasing prices rapidly becasue of the decreased supply and increased demand. The law of supply and demand states that prices go down then quantity consumed increases, but this is not the case. Prices are increasing but the quantity consumed is continuing to increase because of relied need for oil. With natural gas, the increasing price of oil is showing a market shift to natural gas. The price of natural gas is decreasing because of a newly found supply of natural gas. The United states consumes around 20 trillion cubic feet a year, but the new supply found is over 500 trillion cubic feet, a surplus of natural gas available for consumption. This increase in supply is showing a direct effect with the need for natural gas in the heating industry, more people are switching from oil to natural gas becasue of the decrease in prices of heating. With the saving switched from oil to natural gas, switching a heating system would be possible with the money saved from not using oil. With domestic oil monopolies of the past being dissovled so that there is the potential for competition with prices, the prouction cost for producing oil has increased because of the demand. This demand increase has regionally standardized prices for demand but not between the middle eastern oil barons. The monopolies in the oil producing countries has resulted in a constant imported oil price at $103 per barrel, but because demand is on a regional basis, the price may vary state to state. The strength of the middle eastern oil barons, individuals who have greater power in an are, and their influence on price flux makes oil prices sucesstible for drastic change and increase. A domestice reserve of natural gas allows for individual price variation beacuse of the absence of monopolies, individuals that determines who is allowed to access that good. This absence of monopolies will allow for lower prices in the natural gas market and a lower total cost for heating of homes. This allows for more perfect competition, a result in having smaller firms, allowing for more consumer choice between homes, rather than relying on the oil barons to determine production cost for oil companies. http://www.masslive.com/news/index.ssf/2011/03/with_oil_prices_spiking_is_is.html