Why Natural Gas Prices Just Hit a 14-Year High – As U.S. fuel prices surged faster than crude oil over the last month, the United States is facing an energy crisis that just keeps getting worse – and as Americans suffer at the gas pump, the cost of natural gas is rising rapidly too.
Natural gas, an essential fuel for consumers who use it to heat their homes and generate electricity and industries that use it to create petrochemicals and plastic products, surpassed the $8 per thousand cubic feet price over the last week. At a fourteen-year high, the rapid price increase will cause further trouble for the United States economy as inflation already surpassed 8.5% in March this year.
CEO of brokerage Powerhouse Alan Levine offered thoughts on the US natural gas market, suggesting that price uncertainty will remain for some time.
“The terms and conditions of natural gas markets are just not the same as they used to be,” Levine said. “All you can do is speculate what might happen.”
So, what’s causing the price spike?
The weather is perhaps the most significant driving factor behind the spike. Many parts of the United States are experiencing hotter-than-normal weather for spring, creating a greater demand for electricity to power air conditioning and other cooling systems. As natural gas is used to generate electricity, the weather is causing a spike in demand for electricity.
In Texas, the Dallas-Fort Worth area hit 95 degrees for the first time this year – a dramatically higher temperature than usual for this time of year. Experts predict that temperatures could even reach 105 degrees in some parts of the state.
Meteorologist Daniel Huckaby said that current forecasts predict “near-record high temperatures” from Mother’s Day through Tuesday.
Similar temperature increases have been felt in California.
Liquefied natural gas supplies are also unstable, with fewer exports coming from Russia. Sanctions against Russian energy suppliers have forced many European nations to look elsewhere for energy. Japan is also looking for ways to diversify its energy supply and move away from Russian LNG, making demand even hotter.
In Europe, gas prices have risen even higher than in the United States – prompting the Biden administration to move some cargoes of LNG to Europe. The U.S. typically uses most of the natural gas it makes – producing around 97 billion cubic feet of gas per day. It’s enough for domestic use and some exports, but increasing exports means that there is less gas in the United States’ storage tanks than normal. Stored natural gas is currently 16% below the five-year average.
The United States has the capacity to increase supply, but it cannot be done overnight. Japan, faced with a struggle to replace Russian energy supply and considering reopening many of its nuclear reactors, is also considering the possibility of providing financial support to boost the production of LNG in the United States.
Jack Buckby is a British author, counter-extremism researcher, and journalist based in New York. Reporting on the U.K., Europe, and the U.S., he works to analyze and understand left-wing and right-wing radicalization, and reports on Western governments’ approaches to the pressing issues of today. His books and research papers explore these themes and propose pragmatic solutions to our increasingly polarized society.