Get ready to spend more for home heating
Those who heat their homes with natural gas should plan on wrapping up in a blanket a little more often — or on shelling out more to pay their gas bills.
National Fuel Gas Corporation officials said recently natural gas prices on the New York Mercantile Exchange are roughly double the cost at this time last year. The increase in commodity prices and the forecast of a snowier, colder winter in 2021-22 than in 2020-21 are leading National Fuel officials to project the average gas bill from November through March to increase from $498 last winter to $714 this year. That’s a 43% increase.
WHY PRICES ARE UP
The increased price for natural gas is being caused by several factors, according to National Fuel officials. Global demand for domestically produced liquefied natural gas has increased at the same time domestic production of natural gas has been disrupted and natural gas storage inventories are lower than normal.
“As required by state regulations, the utility is required to purchase sufficient quantities of reliable, least-cost natural gas supplies to meet customers’ demands during a colder-than-normal winter,” National Fuel officials said in a recent news release. “Natural gas supply costs are passed along to customers dollar-for-dollar with no mark-up or profit to National Fuel.”
In Europe and Asia, wholesale prices are more than five times what they were a year ago. Power companies in Europe and Asia are engaged in bidding wars over shiploads of liquid natural gas, thereby driving up the cost, according to the Associated Press. Prices are also spiking in the U.S., which converts some of its natural gas into liquid and ships it to Europe and Asia. Those higher costs are showing up in gas bills for consumers around the globe. Analysts expect those prices to rise further through winter, when customers are most reliant on the fuel.
As demand increases, supply has dropped. When the pandemic was raging, oil prices tumbled and producers ran low on money to drill. Once they curtailed drilling for oil, they also retrieved less gas, because most wells pump both oil and gas out of the ground at the same time. Europe burned through significant natural gas last winter to heat homes during frigid weather, leaving storage tanks with little fuel. Then the summer was less windy than usual, so wind turbines didn’t generate as much energy as expected. That, in turn, led nations to burn more natural gas, further depleting reserves.
At the same time, Russia reduced its natural gas supply to Europe, noted Carlos Torres Diaz, an analyst at Rystad Energy, told the Associated Press. All those factors combined to send natural gas prices in Europe skyrocketing to roughly $26 per million BTUs, compared with just $4 at the same time last year. A similar pattern occurred in China and Japan: Power plants burned more natural gas than usual to cool homes on a series of unusually hot days. Prices surged to $29 per million BTU in Asia, Rystad Energy calculated, from $5 a year ago.
Ira Joseph, an analyst at S&P Global Platts, noted that demand for liquid natural gas has been robust, even at much higher prices. In Japan, Pakistan, Bangladesh, Taiwan and Indonesia, prices are so high that power companies will likely burn oil instead, according to Rystad. For the earth’s environment, that could become an alarming trend. Burning oil generates more climate-harming emissions than burning natural gas. The wholesale price of natural gas in the U.S. has exceeded $5, up sharply from $2 to $3 during most of the past two years. That’s the highest price since 2014, though it’s well below levels reached in the 2000s, when prices surpassed $10 per million BTU.
COLDER WINTER FORECAST
The Old Farmer’s Almanac is forecasting a cold and snowy winter for most of Chautauqua County in what the almanac is calling “A Season Of Shivers.”
“This coming winter could well be one of the longest and coldest that we’ve seen in years,” says Janice Stillman, editor of The Old Farmer’s Almanac.
That forecast is being echoed by Accuweather.com, whose models show winter weather possibly arriving earlier across the northeastern United States than it has in the past couple of years. AccuWeather’s team of long-range forecasters, led by Senior Meteorologist Paul Pastelok, has made its annual prediction for the upcoming winter season, giving people all across the country time to prepare for what is expected to be a busy winter from coast to coast. AccuWeather is predicting some similarities this year compared to last winter due to a weather phenomenon known as La Nina.
Last winter, La Nina was a driving force that shaped the weather patterns across the country throughout the season. La Nina is a phenomenon that occurs when the water near the equator of the Pacific Ocean is cooler than average. In turn, this influences the jet stream and the track that storms take when moving across North America. It is also the counterpart to the more well-known El Nino. La Nina is once again predicted to shape part of the overall weather patterns this winter, but Pastelok said that the upcoming La Nina will be weaker than the one experienced last winter. This “opens up the door” for other elements to factor into the winter forecast, especially during the second half of the season.
“This winter, I think, is going to be a colder one, at least for the interior sections from the Appalachians to the Ohio Valley and Great Lakes,” Pastelok said.
Last winter, temperatures across these areas were right around normal, but this year, the winter as a whole is likely to average 1 to 3 degrees Fahrenheit below normal, according to Accuweather. Weather could turn colder in November, Pastelok said, with the possibility of some November snow across the interior northeast. The severity and frequency of the snow and cold air are likely to let up a bit by mid-December before returning with a vengeance in January.
“That’s the month that stands out,” Pastelok said. Heating bills could hit their highest point in January and people all across the Northeast, especially those who live along and west of the Appalachian Mountains, may notice the effects.
— The Associated Press contributed to this report.