Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

US natural gas prices spike to 14-year high. Here's why

US natural gas prices spike to 14-year high. Here's why

US natural gas prices have skyrocketed to levels unseen since 2008, a spike that threatens to offset the benefits of falling prices at the gas pump.

Natural gas futures surged 7% on Tuesday to close at $9.33 per million British thermal unit (BTU), the highest closing price since August 1, 2008.

Although natural gas futures cooled off a touch on Wednesday, they remain up about 70% just since the end of June. And natural gas is up a staggering 525% since closing at $1.48 in June 2020 when Covid-19 had shut much of the US economy down.

The summer spike is being driven in part by high demand as scorching temperatures through much of the country force Americans to crank up the air conditioning. That in turn has chipped away at relatively low inventory levels.

"We've had this perma-heat wave cooking the United States," said Robert Yawger, vice president of energy futures at Mizuho Securities.

As temperatures drop this fall and winter, the natural gas spike signals sticker shock for families. Not only is natural gas a leading fuel source for the electric grid, it's the most popular way to heat homes in America.

"Depending on the weather, it could be a challenging winter," said Rob Thummel, senior portfolio manager at Tortoise Capital Advisors. "But not as challenging as in Europe. They are at risk of running out of natural gas. We aren't."

Europe's natural gas prices are seven times higher


Europe's natural gas crisis is being driven by its reliance on energy from Russia, which has slashed natural gas flows to Europe in response to Western sanctions.

The European Union has been forced to lay plans to ration natural gas, a drastic step that will hurt families and businesses. Natural gas prices have skyrocketed so high in Europe that it threatens to send the continent's economy into recession.

For context, Europe's natural gas prices are trading at levels equivalent to about $70 per million BTUs, according to Andy Lipow, president of Lipow Oil Associates. That is roughly seven times higher than prices in the United States.

But that is little consolation to Americans grappling with high prices at the grocery store, clothing stores and at restaurants.

Even as natural gas prices surge, oil prices have tumbled, helping to drive gasoline prices sharply lower. The national average for regular gasoline has dropped 64 days in a row, according to AAA.

Exports pick-up to Europe


Analysts say Europe's natural gas crisis is contributing to the higher natural gas prices in America, although it's not the main driver.

"Higher global prices are trickling down to the US. Natural gas has become a global commodity with the emergency of LNG," said Thummel.

The United States has stepped up its exports of liquefied natural gas (LNG) to Europe in an effort to mitigate the impact of the loss of Russian gas.

"Every spare molecule we can find, we are shipping to the eurozone," said Yawger.

US natural gas production is lagging behind


But the bigger issue for US natural gas is the fact that inventory levels are below historical averages, leaving the market with less of a buffer and driving up prices.

"We entered this year at beaten-down levels and we never caught up," Yawger said.

Supply has failed to keep up with strong demand for gas. Thummel pointed to how US oil and gas producers are under pressure from Wall Street to spend less on expensive drilling projects and more on dividends and buybacks to shareholders.

"We need more US natural gas production. The production levels are too low," Thummel said.

The good news is that higher prices should, eventually, incentivize more production. And investors are not betting today's high prices will continue. The futures market indicates natural gas prices should be almost 50% lower at this point next year.

Then again, very few people thought a year ago natural gas prices would be at 2008 levels. And yet here we are.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
House Republicans Move to Defund OECD Over Global Tax Dispute
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
Intel Reports Revenue Beats but Sees 81% Rise in Losses
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
CEO Resigns Amid Controversy Over Relationship with HR Executive
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
Tulsi Gabbard Unveils Evidence Alleging Political Manipulation of Intelligence During Trump Administration
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Trump Announces Coca-Cola to Shift to Cane Sugar in U.S. Production
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Air India Pilot’s Mental Health Records Under Scrutiny
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
Moonshot AI Unveils Kimi K2: A New Open-Source AI Model
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Bitcoin Reaches New Milestone of $116,000
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
×