Electricity Rates Are Increasing, We’re Here to Help7 minutes 6/29/2022
Posted by, Price To Compare
At Price to Compare, our job is to help you as a consumer in a deregulated energy market save money on your home’s energy costs. We help you choose an energy provider that works best for you and your home. We provide information about the different energy providers available to you in a simple, easy-to-read format, and walk you through the process of getting set up with the energy provider of your choice.
Staying up-to-date on the energy market means monitoring fluctuations that may cause an increase in energy prices. Unfortunately, as if increasing gasoline prices aren’t frustrating enough, many Americans will likely see a spike in their electricity bills this summer. Why are electric bills expected to be so high? The rising price of U.S. natural gas will cause electricity rates to hit record highs for the first time in over a decade, as the price of natural gas has risen 90% since the beginning of March 2022. We’re here to explain these rising costs and to provide you with options for your residential energy provider to save you as much money as possible.
Don’t let increasing natural gas prices and high energy bills intimidate you - we’re here to unpack the different factors that are influencing energy prices so that you can continue to be informed as a consumer. This will allow you to continue to make the best decisions possible for your energy supplier to ensure that you and your household can keep your utility bills within budget.
Higher Natural Gas Rates Will Impact Home Utility Bills
When the price of natural gas goes up, so do energy prices. Natural gas is burned to produce about 40 percent of the nation’s electricity. This means that energy providers will charge more to be able to make a profit since the natural gas they’re sourcing costs them more to purchase. Price To Compare is here to provide you with all the information you need to make the best decision for your home when it comes to your energy provider. During a time when rates are high, it’s especially important you have the support you need to make the most budget-friendly decisions for your home. We’re here to help!
The Facts About High Natural Gas Prices
- In just the first two months of the year, the national average cost of electricity for residents was nearly 14 cents per kilowatt-hour. This doesn’t account for the explosion of prices over the last several months, or the difference in cost between residential and commercial electricity.
- Home electricity rates have risen up to 23% in certain states between January 2021 and January 2022.
- The spot price for natural gas at Henry Hub, a distribution hub for natural gas in the U.S., reached $8 per thousand cubic feet recently. For reference, in 2008 when natural gas prices were at their highest, the cost was an average of $4.40 per thousand cubic feet.
- Natural gas is normally stored so that there’s a supply readily available if production slows. Currently, the amount of natural gas in storage is about 1.567 trillion cubic feet, or about 16% below the five-year average.
Why Are Natural Gas Prices Rising?
Natural gas prices in the U.S. are at a record 14-year high. Some of the factors behind this spike are more obvious than others, and many are complex and intertwined. The factors that cause this increase will impact many consumers by causing higher energy bills each month, and this trend is expected to continue through the end of the year.
The War in Ukraine Is Contributing to Higher Natural Gas Prices
The Russian war on Ukraine is a more minor factor in the spike in natural gas prices than some might think. In 2022, the U.S. became the worldwide leading exporter of natural gas, due to many countries’ refusal to buy fossil fuel from Russia. The country is normally the world’s biggest exporter of crude, fuel, and natural gas - until many nations opted to stop purchasing fuel from them. While the Russian war in Ukraine is having a strong impact on natural gas prices in Europe, it’s only a minor contributor to the rising cost of natural gas in the U.S. Even so, this is one factor that is contributing to the rise of natural gas prices in America, and therefore rising energy prices you’ll notice on your utility bill.
Extreme Temperatures Will Impact Natural Gas Prices
Temperatures are expected to rise well above average in many parts of the U.S. this summer. Many residents will crank their air conditioning to keep things cool, so higher temperatures will increase the demand for the natural gas that produces electricity for air conditioning. Extreme weather on either end of the spectrum - hot or cold - can push prices up dramatically as residents like you seek to cool or warm their homes accordingly. This year, many parts of the country experienced extremely cold winters, and many areas are expected to have hotter than normal summers as well. It’s no surprise to many residents that their utility bills are driven by the weather outside, and this year that will be especially true.
Demand for Natural Gas Exceeds Supply to Cause Higher Rates
Unfortunately, natural gas production came to a halt in 2020 due to the pandemic. The gas industry is still recovering from the impact of COVID-19, so supplies are at much lower levels than usual. The supply of natural gas is still working to catch up with the steady and growing demand for it. With cold winters behind and a prediction of warm summers ahead, demand for natural gas continues to climb while the supply continues to fight to catch up. This will continue to impact the availability of natural gas and energy companies’ ability to obtain it. The U.S. government is urging companies to produce more natural gas, but a significant increase in production could take years. This will all impact the higher rates that consumers will see on their energy bills.
Does Inflation Impact Natural Gas Prices?
When consumers look at the rising cost of gasoline, it can be easy to assume that overall economic inflation impacts natural gas prices directly. Instead, natural gas prices actually are what drive inflation or at least provide an indication of the overall state of the economy. This is because commodities generally respond more quickly to changes in the economy. So, an increase in natural gas prices may not be directly due to inflation, but if gas prices are up, it’s likely that inflation is on the rise. This is something to pay attention to as a consumer to avoid being caught off guard when your home’s energy bill spikes.
Less Natural Gas in Storage Leads to Higher Energy Prices
Due to lower production rates, there is less natural gas in storage right now. Spring is the time when gas utility companies normally stockpile supplies in preparation for warmer months when demand is high. Due to overseas demand and concern about restrictions on gas supplies globally, this storage of natural gas hasn’t occurred as it normally would. This means that there is even less natural gas available and what is being produced is in especially high demand. This is another factor that is contributing to sky-high natural gas prices and, in turn, higher energy bills.
Rising Prices for All Energy Markets
All other sectors of the energy market - fuel, oil, and coal - are also experiencing similar spikes following the Russian invasion of Ukraine. Unfortunately, the gas industry has gotten caught up in the frenzy as countries in Europe and other parts of the world are scrambling to ensure they aren’t lacking supply since cutting economic ties with Russia. This turmoil leads to spiked prices all over the map, and this is expected to continue as long as countries decide not to purchase these commodities from Russia. The overall frenzy in the industry will lead to increased natural gas prices and therefore an increase in your home’s utility bills.
How Will High Natural Gas Prices Impact Your Home?
As a residential energy broker, Price To Compare works hard alongside you to find an energy company that works best for you. When energy prices are at all-time highs, increased utility bills and higher costs can seem intimidating. How much your bills will increase depends heavily on your provider, where the gas is coming from, and what they’re charging consumers. Our experts at Price To Compare are constantly evaluating competitive electricity and natural gas suppliers. Over a decade of experience allows us to leverage the best energy rates in your area and connect you directly with the right provider.
We have a solid network of energy providers to choose from and we are continually monitoring rates to bring you the best one for your home. Our promise is to help you lock in the lowest average gas bill possible, even in times when natural gas prices are unusually high. You can count on Price To Compare to ensure that your energy bill is as low as possible in today’s market.
How To Reduce The Impact Of High Natural Gas Prices
Sadly, there’s no quick fix to higher natural gas prices. But there are ways to reduce the impact for your household. While some states are looking at their billing practices to address the high price that consumers are paying energy providers, others are looking at long-term solutions such as renewable energy.
In 2018, coal-powered electricity and natural gas made up about 55% of total energy-related emissions in the United States. Switching to a renewable energy supplier supports clean-energy initiatives and even helps provide your area with more green power sources. Wind, hydroelectric, solar, and even tidal power are renewable energy sources that, while expensive to implement on the front end, can have dramatically lower costs in the long run. Price To Compare has options for renewable energy providers that are available if your business is looking to make the jump into green energy.
Cut Down on Natural Gas Use - Look Into Renewable Energy Options
It may seem counterintuitive, but really there has never been a better time to consider investing in renewable energy than when natural gas prices are high. Worldwide, the renewable energy market is exploding at unprecedented rates, despite challenges caused by supply chain bottlenecks and other impacts post-pandemic. Renewable energy options are more affordable than ever due to constant technology improvements.
Natural gas prices are increasing much faster than the cost of installing renewable energy, making it a more affordable option in today’s market. Price To Compare can connect you with an affordable renewable energy supplier to help reduce your home’s carbon footprint. Price To Compare can make the switch to a renewable energy provider easy.
- Green Energy Plans: No matter what renewable power source you choose - wind, solar, biomass, geothermal, or hydroelectric - Price To Compare can connect you to the right energy provider. Before you reach out to us, check your current energy bill to see how much of your power is currently renewable. A partial or renewable energy plan could drastically reduce your energy costs in the long run.
What To Do When Your Energy Bills Are High
If your home’s energy bill is high, it may be a good time to consider your options. Price To Compare can make the process of switching to a new energy provider simple and painless. Each energy company has complicated plans, different rates, and difficult-to-understand contracts. Price To Compare does all the footwork to gather each provider’s energy sources, rates, fees, and other important information to simplify the process of choosing a residential electric provider. During a season that is can be difficult for you as a consumer, Integrity Energy is here to take the work of choosing an electric provider off your plate so you can focus on what’s important: keeping your household safe and comfortable.
Pro Tip: Ready to find the lowest energy rate possible for your home? Have your current electric bill handy to compare residential electricity rates in your area.
Pro-Tip: Let Integrity Energy produce a business electricity rates comparison for you and save your business up to 50% on energy bills! Even with high natural gas prices, Integrity Energy can gather and compare energy providers’ rates for you to ensure that you’re saving as much as possible on your business’s energy bill.
Looking to Save on Energy Prices for Your Business?
Visit our commercial site, IntegrityEnergy.com, today.