Prices for natural gas have doubled since last year, and an extra cold winter could make them double again, analysts say—potentially meaning higher household heating and electric bills.
Commodity prices for natural gas are closely linked to the rates paid by households. The standard benchmark price, measured at the Henry Hub pipeline delivery point in Louisiana, rose to $4.71 this week for 1 million British thermal units of gas (a measure of the heat content of fuel) from $2.35 the same time last year, according to data from the U.S. Energy Information Administration. The chart below shows the steady uptick, with a spike in February caused by production disruptions in Texas.
At least some of those increases have been passed on to consumers, as households paid 19% more for natural gas this July than they did the year before, according to the most recent available price data from the Bureau of Labor Statistics.
Hotter-than-expected weather has contributed to the price hikes, as power plants have been forced to burn more natural gas to generate electricity to keep air conditioners running, analysts at Goldman Sachs said in a research note this week.
Extreme temperatures have already strained household utility budgets, especially for low-income families. A record number of households, 1.2 million, got help from the Low Income Energy Assistance Program this summer, up 46% from the year before, the National Energy Assistance Directors Association said last week. But the price increases so far might be just the beginning. Much as extreme weather has contributed to high summertime prices, a cold snap this winter could drive them higher still, more than doubling commodity prices again, Goldman analysts said.
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