Rising natural gas prices amid a hot summer are contributing to higher electricity bills across the United States. Here, the sun sets behind electric power lines in Redondo Beach, California, on August 31.
Patrick T. Fallon/AFP via Getty Images
Hide caption
Caption switch
Patrick T. Fallon/AFP via Getty Images
Rising natural gas prices amid a hot summer are contributing to higher electricity bills across the United States. Here, the sun sets behind electric power lines in Redondo Beach, California, on August 31.
Patrick T. Fallon/AFP via Getty Images
If you feel that air conditioning your home is too expensive this summer, be prepared, because turning up the heat could cost more this winter.
Higher utility bills are due to higher prices for natural gas, which generates about 40% of US electricity.
The US Energy Information Administration It expects this increase to continue through the winter, given that the Russian invasion of Ukraine has reduced overall supplies while global consumption remains high.
Here’s why prices are rising and how it can affect you.
Russia is arming its natural gas supplies
There is much less natural gas in the world these days because of Russia.
For years, Russia supplied Europe with cheap natural gas to power its factories and heat its homes. But after the West imposed sanctions over the war in Ukraine, Russia reduced its supplies, effectively weaponizing its natural gas.
While global supply has declined, demand has remained high.
In the United States, half of homes use natural gas for heating or cooling.
Due to how hot this summer has been in parts of the United States, many of them had air conditioners running overtime.
Natural gas inventories in the United States have also fallen this year, which together has led to higher prices About 300% from the past few years.
What does this mean for US prices?
Prices are expected to continue to rise.
Although the country’s reserves of liquid natural gas have fallen, this has not prevented the United States from exporting large quantities to Europe to help fill the void left by Russia.
US natural gas producers have an incentive to export because they will benefit from the sharp rise in world prices.
“If the price they can get in Europe is a lot more than what they can sell for natural gas in the US, some of it will be exported to Europe, and that will raise the price of things in the US,” says Elaine Wald, an oil expert. and gas in the Atlantic Council.
“Not at the levels we see in Europe, but we can continue to see very expensive energy costs in the United States because of this,” she adds.
There is also a geopolitical argument for increasing supplies to Europe. The European Union is a huge trading partner, and major economic turmoil there could send aftershocks to the United States.
How high will your electricity bills go?
Bills can go up a lot, especially in a state like Texas, which is the largest consumer of natural gas, followed by California.
The National Energy Aid Managers Association (NEADA) estimates that the average family might pay Over $1,200 to heat their house This winter. That’s $175 more than last winter, which is notable given that nearly 40% of families are already feeling cash-strapped, according to a new report. NPR/PBS NewsHour/ Marist Poll.
40% of US homes using natural gas could see winter heating costs increase by a third, according to NEADA, which Can keep inflation high.
But a lot of this also depends on the winter weather. The United States could avoid a massive rise if the winter were mild.
Russia reduced natural gas supplies to Europe after the West imposed sanctions on it, driving up global natural gas prices. Here, the logo of Russian energy giant Gazprom is displayed at a gas station in Moscow in September.
Kirill Kudryavtsev/AFP via Getty Images
Hide caption
Caption switch
Kirill Kudryavtsev/AFP via Getty Images
Russia reduced natural gas supplies to Europe after the West imposed sanctions on it, driving up global natural gas prices. Here, the logo of Russian energy giant Gazprom is displayed at a gas station in Moscow in September.
Kirill Kudryavtsev/AFP via Getty Images
How long can this last?
Much depends on whether Russia will restart its gas taps for Europe before winter. Kremlin spokesman Dmitry Peskov said this month that Russia would only resume gas flows if the West lifted sanctions.
The other big factor is the speed with which Europe can find alternative sources of natural gas.
Currently, Europe gets most of its gas via pipelines, but it is racing to create additional infrastructure to receive LNG, which can be transported by sea from countries like Qatar.
This will take time, but in the long run, it will free Europe from dependence on Russia for a major commodity.
“Europe will be in a better position because it will completely get rid of its dependence on Russian gas,” says Agathe Demarais, director of global forecasts at the Economist Intelligence Unit. “After a few years, Russia will no longer be able to arm gas supplies.”
Until then, while the US continues to export its supplies to Europe and demand remains high, this price hike may continue for some time.
“Twitteraholic. Total bacon fan. Explorer. Typical social media practitioner. Beer maven. Web aficionado.”