Surging natural gas prices may show up on winter bills
NEW YORK — Brace for a rude surprise on your winter heating bills.
After years of unusually inexpensive levels, the price of natural gas in the United States has more than doubled since this time last year. In Europe and Asia, wholesale prices are more than five times what they were a year ago.
The surging costs have coincided with a robust recovery from the pandemic recession, with more homes and businesses burning all forms of fuel. That intensified demand is poised to contribute to higher heating costs in many areas of the world.
Having enjoyed a period of low prices, consumers of natural gas are facing the burden of far more expensive fuel — and the prospect of much higher heating bills this winter.
“Consumers got used to very low prices last year, because with the pandemic everything was shut down,” said Mark Wolfe, executive director of the National Energy Assistance Directors Association. “Now, everything’s coming back online, industry is returning and natural gas is being used again in very large quantities. And that’s pushing up the price.”
In Europe and Asia, some companies that rely on natural gas have been forced out of business because of the higher prices. Four small British energy companies failed in recent weeks. Fertilizer producers, which use natural gas as a feedstock, are struggling. So are heavy industries that require significant heat, such as aluminum or cement producers.
Power companies in Europe and Asia are engaged in bidding wars over shiploads of liquid natural gas, thereby driving up the cost. Prices are also spiking in the U.S., which converts some of its natural gas into liquid and ships it to Europe and Asia. Those higher costs are showing up in gas bills for consumers around the globe.
The main reason natural gas prices have jumped is that demand for fuel has accelerated as economies have recovered from the damage caused by the pandemic. But there’s another key factor too: There’s simply less gas on the market.
The factors that have diminished the supply are varied. When the pandemic was raging, oil prices tumbled and producers ran low on money to drill. Once they curtailed drilling for oil, they also retrieved less gas, because most wells pump both oil and gas out of the ground at the same time.
What’s more, Europe burned through significant natural gas last winter to heat homes during frigid weather, leaving storage tanks with little fuel. Then the summer was less windy than usual, so wind turbines didn’t generate as much energy as expected. That, in turn, led nations to burn more natural gas.
For customers in the U.S., Europe and Asia, winter heating bills could be sharply higher. In the U.S., according to the National Energy Assistance Directors Association, natural gas bills could be as much as 30% more for consumers this winter, with the average cost to heat a home rising to $750, from $572 over the same months last winter.