Natural gas prices rise amid expectations of a colder than expected winter

Natural gas prices rose more than 20% on Monday after a flurry of expectations over the weekend Incoming arctic air It could set the United States for the coldest January in a decade or more.

Although prices fell somewhat the next day, the big market rallies this winter may not be far from over.

Phil Flynn, Energy Market Analyst Fox Business America has an abundant supply of natural gas, which is a good thing, the contributor says. The problem in his view is that the United States has also been complacent on the demand side when it comes to cold weather, because the country has not really experienced the kind of harsh winter that was expected for a long period of time.

He explained that the expected long period of extreme cold will not only increase demand and deplete inventory – perhaps at the fastest pace ever seen – but threatens to disrupt production.

Energy prices are high and people in these states face high electricity bills

“When you get a cold event like this, not only do you see record demand, but you also have the potential for infrastructure to freeze,” Flynn said in an interview. “They have to shut down the wells because it is too dangerous to produce.”

It is not just the United States that could be affected. Some forecasters say Europe can expect a colder winter due to the polar vortex as well, and that region is already seeing a spike in natural gas prices as stocks are depleted faster than usual.

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Meanwhile, Russian gas giant Gazprom is scheduled to… Stop all piped gas connections It is shipped via Ukrainian pipelines to other European countries, after its five-year contract expires.

That’s another reason why President Biden’s pause on LNG export permits is “ridiculous,” Flynn said.

Markets react to all of these factors. So what does this mean for the consumer?

Flynn says when the price… Natural gas As happened this week, it typically takes a few months for these increases to reach consumers depending on what part of the country they live in and how their local utilities operate.

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Regardless, when temperatures drop, Americans living in areas affected by a cold snap can expect their bills to rise almost immediately due to usage alone, because they tend to turn up their thermostats and run their heaters around the clock.

“Consumers are feeling it, mainly because they’re using more and prices are going up as well,” Flynn told FOX Business. “It’s a double whammy.”