Natural gas prices in the US are on the rise
Energy prices in the US are going up and so are the costs of natural gas. Oil and natural gas prices have been on the rise not just in the US but worldwide due to geopolitical reasons, the main one being the war in Ukraine, and because of the effects of the pandemic. As the recovery from such events is lengthy, prices are expected to keep going up for months to come.
‘The price of natural gas also increased 0.6% on a monthly basis and by 21.6% on an annual basis in March,’ AA reported.
Natural gas is of big importance to the US. It is used by the industrial sector as a fuel for process heating, as a raw material in the process of producing chemicals, as a fertiliser, and as an element used in power systems.
‘Natural gas generates about 35% of U.S. power, and prices for the fuel have doubled in the past year. Demand and prices also soared for coal, which accounts for about 22% of the electricity mix in the country,’ Bloomberg reports.
What is natural gas?
As EIA explains ‘natural gas is a fossil energy source that formed deep beneath the earth’s surface. Natural gas contains many different compounds. The largest component of natural gas is methane. We use natural gas as a fuel and to make materials and chemicals.’
Natural gas can also be described as a mixture of gases that are naturally found in the atmosphere and that are rich in hydrocarbons.
In the table below you can find the biggest advantages and disadvantages of natural gas:
| Advantages | Disadvantages |
| Less expensive than other fossil fuels Burns cleaner than other fossil fuels Very reliable More efficient storage and transportation than renewable energy | Highly flammable which can be dangerous Pollutes the environment and contributes to greenhouse gases Non-renewable Long and expensive processing process Expensive storage |
Why is natural gas getting more expensive?
In April US natural gas prices got the highest in 13 years. Price levels that the US is facing now have not been seen since 2008.
One of the reasons for prices of natural gas going up is the war in Ukraine. Russia is a big exporter of natural gas and oil so the war has been causing disruptions that led to higher prices.
Then, the shortage in supply has also been amongst the main reasons for price increases. Following a period of low supplies because of the coronavirus pandemic, the US has been struggling to meet the higher demand.
Finally, the weather often determines the demand for natural gas. Last winter was exceptionally cold so the demand for natural gas was also higher than usual and now the US is still facing some supply shortages. The production process of natural gas takes time and the demand from overseas, from countries that are also dealing with energy crises, has used up a lot of natural gas reserves that the US had.
Moreover, as EIA reported ‘in mid-February, an intense winter storm in the central United States both increased energy consumption and disrupted energy supply. Daily dry natural gas production in Texas fell by almost half on Wednesday, February 17, according to estimates from IHS Markit, mostly because of well freeze-offs, which occur when water in the raw natural gas stream freezes.’
For now it is impossible to predict how the prices of natural gas will be changing in the next few months. Unfortunately, however, many say that they will keep increasing. The US should, therefore, focus more on transitioning to renewable energies that can be more reliable and offer more price stability.