Natural Gas Rates Continue to Rise - Let Us Help!5 minutes 7/25/2022
Posted by, Price To Compare
Deregulated energy markets can feel overwhelming and complicated. Things can seem especially stressful during a time when natural gas rates are through the roof, causing energy prices to rise as well. At Price to Compare, our job is to help you and your home save money on energy costs in deregulated energy markets. We help consumers like your choose an energy provider that works best for them. We take the guesswork out of choosing an energy provider, providing information about the different providers available to you in an uncomplicated, easy-to-read format. We walk you through the process of getting set up with the energy provider of your choice from start to finish.
Staying up-to-date on the energy market means monitoring changes that may cause energy prices to fluctuate. Americans in most regions have seen drastic increases in gasoline prices the last several months, and some have already seen their energy bills start to go up as well. Unfortunately, many American homes will continue see a spike in their energy rates this summer. Why are energy bills expected to be so high? The rising price of U.S. natural gas will cause energy 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. Price to Compare is here to explain these rising natural gas prices and to continue to provide you with options for your residential energy provider to save you as much money as possible.
Increasing natural gas prices may seem intimidating at first, but don’t worry - we’re here to unpack the different factors that are influencing high energy prices so that you can continue to be informed as a resident. Our hope is that this information will empower you as a resident to continue to make the best economic decisions for your home so that it can can remain safe and comfortable for you and your household.
Increasing Natural Gas Rates’ Impact On Residents
Energy prices are closely correlated to natural gas prices. This is because natural gas is burned to produce about 40 percent of the nation’s energy and electricity. This means that energy providers will charge more to be able to make a profit since natural gas costs them more to purchase. This in turn causes higher energy bills for your home. Price to Compare’s team is still 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. We are committed to bringing you the latest updates in natural gas pricing and availability.
The Facts About High Natural Gas Prices
- Between 2016 and 2020, the average annual cost of natural gas delivered to electric generators ranged between $2.40 and $3.55 per million British thermal units (MMBtu). In 2021 the cost rose to an average of $4.97/MMBtu, more than double the 2020 average price.
- The Henry Hub spot price in April 2022 averaged $6.59/MMBtu - over two times the average monthly price as one year prior.
- The U.S. Energy Information Administration estimates that the cost of natural gas delivered to U.S. power generators will average $8.81/MMBtu this summer, which is nearly 125% higher than the cost last summer.
Reasons for High Natural Gas Prices
U.S. natural gas prices are at record highs not seen in over a decade. There is a multitude of complex reasons for skyrocketing prices, but all these factors will cause high natural gas prices to impact many consumers as they see higher-than-normal energy bills each month this summer and likely through the end of 2022.
The War in Ukraine Is Leading to Rising Natural Gas Prices
The war in Ukraine, driven by Russia, is a factor in the increase in natural gas prices. In 2022, the U.S. became the worldwide leading exporter of natural gas, due to many countries’ refusal to buy fossil fuel from Russia, which is normally the world’s biggest exporter of crude, fuel, and natural gas. Many European countries looked to the U.S. for natural gas supplies as they have desperately tried to reduce their dependence on Russia. This is one factor that is contributing to the rise of natural gas prices in America, and therefore rising energy prices for your home.
Warmer Weather & Higher Demand Impact Natural Gas Prices
Many parts of the country are expected to see temperatures rise to well above average this summer. This will lead to an increase in the demand for natural gas, which is used to produce energy and electricity for air conditioning. Extremely hot or extremely cold temperatures can causes dramatic increases in natural gas prices due to high demand. Many parts of the U.S. already experienced extremely cold winters, and many regions are expected to have hotter than normal summers. Your home’s energy bills will likely be affected by a higher demand for natural gas driven by extreme weather.
Lower Supplies of Natural Gas Means Prices Are Higher
Natural gas production came to nearly a complete stop in 2020 due to the COVID-19 pandemic. The natural gas industry is still recovering from the impact of COVID-19 and supplies are at much lower levels than usual. The demand for natural gas remains high and even continues to grow, as we’ve discussed, due to multiple factors including pressure on the U.S. to supply more natural gas and extreme weather conditions. These factors will continue to impact the demand for natural gas and energy companies’ ability to obtain supplies of it. The U.S. government is urging companies along to catch up and produce more natural gas, but a significant increase in production could take years.
Does Inflation Impact Natural Gas Prices?
Natural gas prices may seem to follow inflation levels, as we’ve seen with the rising cost of gasoline. Instead, natural gas prices are actually one factor that drives inflation, rather than the other way around. Commodities like natural gas 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. As you likely do with other supplies and commodities, paying attention to the inflation of natural gas prices is important to keep your home comfortable
A Lack of Natural Gas Produced for Storage In Off-Months Leading to Higher Prices
Spring has historically been the time when gas utility companies normally stockpile supplies of natural gas in preparation for warmer months when demand is high, since demand tends to be lower in spring. There is less natural gas in storage right now due to the past couple of years of lower production rates overall. Due to overseas demand and concern about restrictions on gas supplies globally because of the Russian war in Ukraine, this storage of natural gas hasn’t occurred as it normally would. Therefore, there is even less natural gas available and what is being produced is in increasingly high demand. This is another factor that is contributing to skyrocketing natural gas prices and, in turn, higher energy prices for your home.
Are There Any Other Recent Events Contributing to Changing Natural Gas Prices?
At Price to Compare, we are constantly monitoring the energy landscape to remain aware of recent events that may cause fluctuations in energy prices. There are sometimes singular events that impact the price of natural gas that are important to remain aware of.
On Tuesday, June 14, 2022, an American gas company announced that there was an explosion and a fire in a Texas export terminal that would likely take several months to prepare. Approximately 14 percent of U.S. liquefied gas exports were affected. At the same time, Gazprom, a Russian energy company, announced that it would be reducing its gas shipments to Germany via the Nord Stream pipeline.
European gas prices increased by 16 percent just a couple of days later, while natural gas prices in the U.S. plummeted more than 16 percent. This is likely due to the fact that the amount of gas able to be exported to European countries will be reduced, and natural gas supplies will be added in the U.S. It will also add storage of natural gas supplies in preparation for next winter.
Incidents like these are important to stay up-to-date on since they can impact the price of natural gas almost overnight. While it seems this unfortunate accident may bring some relief the U.S. has been needing, there is no telling how natural gas prices may continue to fluctuate over the coming weeks and months. Experts still predict an overall stead incline through the end of 2022.
How Will Increasing Natural Gas Prices Impact Your Home?
You work tirelessly to keep your household and thriving over the long run. Price to Compare is committed to working hard alongside you to find an energy company that meets your home’s needs. When natural gas prices are at all-time highs, increased utility bills and higher energy costs can seem intimidating. How much your bills will increase depends greatly on your energy provider, the source of the energy, and what they’re charging consumers. Our experts at Price to Compare are constantly evaluating competitive natural gas and other energy suppliers. Our quotes are adjusted to fit your exact energy needs and to help you cut costs as much as possible.
Our agents are constantly tracking the current market trends and keeping tabs on our strong network of 30 energy providers, so there’s no guessing game in choosing the right natural gas rate. Our promise is to help you lock in the lowest average gas bill possible, even in times when natural gas prices are higher than normal. Price to Compare is committed to ensuring that your energy bill is as low as possible, even in today’s competitive and challenging market.
Reducing the Impact of High Natural Gas Prices
High natural gas prices are not subject to a quick fix. Some states and local governments are looking at their billing practices to reduce the impact of high natural gas prices price on consumers by regulating what energy companies can charge. Certain states are also looking at long-term solutions such as investment in renewable energy. 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 other than energy derived from natural gas, including renewable energy providers that are available if you are looking to make the switch to green energy for your home.
Reduce Natural Gas Usage - Look Into Renewable Energy Options
It may not seem so on first glance, 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 rapid rates, even fighting through difficulties caused by supply chain disruptions and other impacts that the pandemic had on suppliers. Renewable energy is also more affordable than ever due to constant technology improvements.
Natural gas prices are increasing much faster than the cost of installing renewable energy, making renewable energy sources more affordable in today’s market. Price to Compare can connect you with the affordable renewable energy supplier of your choice - short circuit natural gas suppliers to help your busines save money and grow in sustainable practices. Give your home an edge by opting for a renewable energy supplier. Price to Compare has a strong network of residential providers with affordable renewable energy plans that can work hard for your home. We can help you find the best one for your home.
- 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 100% renewable energy plan might change your home for the better.
What To Do When Your Energy Prices Are High
If your home’s energy bills seem too high, it may be a good time to consider what else is out there. Price to Compare can make the process of switching to a new energy provider quick and pain-free. Each energy company tends to have overcomplicated plans, varying rates, and confusing contracts. Price to Compare does all the legwork to gather each provider’s energy sources, rates, fees, and other important information. This simplifies the process of choosing your energy provider. During a season that might be difficult for you as a homeowner, Price to Compare is here to take the work of choosing an electric provider off your plate so you can focus on keeping your home comfortable and living life well.
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.
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