With natural gas prices surging more than 180%, Americans should brace for a cold winter. Many households might find home heating costs more expensive than ever.
Natural Gas Prices Highest Since 2015
The price of natural gas, which supplies heat to most American homes, is now 180% more expensive over the past year. At $5.90 per million BTUs, this is natural gas’ highest price since February 2014.
Families should look out for signs of an early winter or an incoming cold snap. A sudden drop in temperatures usually means higher heat consumption.
If this happens, expect the country’s already below-average natural gas stockpile can further go down. Lower stocks would also mean higher gas prices. Robert Yawner, energy futures director at Mizuho Securities, warned of a potentially expensive winter ahead. “If we get an early frost, it could get ugly. It could get ugly fast,” he said.
Higher Natural Gas Prices Among Many Signs of Inflation
The continued rise in natural gas prices is further proof that the United States is currently mired in inflation. Many companies raised their prices on their products.
They pointed to higher wages, higher shipping costs, and more expensive prices of raw materials as the reasons for increasing prices. As a result, many American families are now dealing with surging prices on everything from new homes to takeout food to gasoline.
In addition, the Federal Reserve is now seriously considering cutting down its efforts to prop up the economy. Many lawmakers are now questioning the need for President Joe Biden’s spending programs that require trillions of dollars. What’s more, the rising prices of oil and other fossil fuels due to lower supplies and higher prices are making investors jittery.
Utility Companies Assure Households Of Stable Prices
About 50% of total US households use natural gas for heating their homes, according to the US Energy Information Administration.
Meanwhile, the American Gas Association, which boasts of members such as Con Edison, assured the public that prices will remain stable. Spokesperson Jaken Rubin said that “natural gas utility customers are not paying the day-to-day prices for natural gas that we see in the headlines.”
Instead, AGA member companies buy gas in bulk through long-term contracts. This locks in prices and protects customers from spikes in prices. Rubin also assured customers that most utility companies will utilize both their winter stock with earlier purchases of natural gas.
Supplies Of Natural Gas Remain Limited
The supply of natural gas is down as production outputs remain low. However, demand continues to rise as many US companies are now gearing to bring production levels back to pre-pandemic rates.
As a result, the law of supply and demand took over and pushed natural gas prices higher. Heat waves that happened over the US during the summer also led to increased use of air conditioners across households. This drove up consumption significantly.
In addition, natural gas producers endured many years of losing money. This made them extra cautious about increasing production despite higher demand. This is why storage levels in the continental US remain slightly below normal.
Are you prepared for a cold winter within the next few months? Do you think natural gas prices will even go higher in the coming weeks as the country approaches winter?
Tell us what you think about potentially rising utility costs such as natural gas. Share your comments in the comments section below.
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