Natural gas prices are rising with forecasts of a colder than expected winter
Former Trump Energy Secretary Dan Brouillette explains how America can create global demand for natural gas and oil.
Natural gas prices rose more than 20% on Monday after several forecasters over the weekend predicted that incoming arctic air could set the US for the coldest January in a decade or more.
Although prices retreated the next day, this winter’s stock market rally may be far from over.
Natural gas prices rose this week following forecasts that the US and Europe could face a harsher winter than previously expected. (Silas Stein/photo alliance via Getty Images/Getty Images)
Phil Flynn, energy markets analyst and FOX business donor, says America has a lot of natural gas produced, which is good. The problem, in his opinion, is that the US has also been neglecting the demand side when it comes to cold weather, because the country has not seen the kind of severe winter that has been predicted for a long time.
He explained that a prolonged period of freezing cold would not only increase demand and deplete storage – possibly at the fastest pace we’ve ever seen – but risk disrupting production.
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“When you get a cold event like this, not only do you see record demand, but you have the potential for the infrastructure to freeze,” Flynn said in an interview. “They must close the wells because it is dangerous to produce them.”
Ice-covered transmission lines leading to Liquefied Natural Gas (LNG) terminal storage tanks. (Reuters Photos/Gary Cameron / Reuters)
It’s not just the US that could be affected. Some forecasters say Europe can expect a cold winter due to the polar vortex, and, that region is already seeing higher natural electricity prices as storage is dwindling faster than usual.
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At the same time, the Russian gas giant, Gazprom, is expected to stop all exports of Ukrainian pipeline gas to other European countries, following the expiration of its five-year contract.
Flynn said that’s another reason President Biden’s suspension of liquefied natural gas (LNG) export permits is “ridiculous.”
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Markets react to all these factors. So what does this mean for the consumer?
Flynn says when natural gas prices jump like they did this week, it usually takes several months for those increases to reach consumers depending on where they live and how their local utilities work.
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Regardless, when temperatures drop, Americans living in cold-affected areas can expect to see their bills rise almost immediately due to usage alone, because they tend to raise their thermostats and have their heaters running around the clock.
“Consumers are feeling it, especially because they’re spending more and prices are going up,” Flynn told FOX Business. “It’s a double whammy.”
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