After hitting their highest levels since 2014 just a few months ago, natural gas prices have fallen in recent weeks, falling more than 10% on Monday alone, a development that could provide much-needed relief to many. Americans preparing for high home heating. bills this winter.
The latest drop came after the release of updated government weather forecasts projecting warmer-than-expected winter temperatures. Natural gas prices traded on the futures market are now back to levels prevailing last summer and are down about 41% from their October high.
After plunging sharply during the height of pandemic lockdowns as the economy slowed, prices for energy and other commodities have skyrocketed this year as the economic recovery accelerates and many goods and commodities have become entangled in tangled global supply chains.
Natural gas, used to heat nearly half of American households, nearly doubled its price earlier this fall. Prices remain higher than they were during the height of the pandemic, at around $ 3.75 per thousand cubic feet on the New York Mercantile Exchange. These prices have risen about 50 percent since January, but are well below those at the end of October, when they exceeded $ 6 per thousand cubic feet.
Natural gas prices have recently fallen more sharply as the weather in much of the country was warmer than expected. Concerns over gas supplies, which were a much bigger problem in Europe, have also subsided in the United States.
âWe still have January, February, March – but it’s definitely a good sign it’s happening,â said Mark Wolfe, executive director of the National Energy Assistance Directors’ Association, a group of state officials who provide assistance. assistance to households. in need. âIf the winter is warmer then our consumption estimates will go down and if consumption is down it will lower the price of fuel. It’s a good sign.
Even though the winter months are not as cold as average, other factors, including limited supply and high demand for gas from power plants and other users, could keep heating costs high. , said energy experts.
Conversely, gas prices could fall further if the Omicron variant of the coronavirus proves to be more dangerous than expected, slowing the economy and undermining demand for goods and services.
Good news regarding energy prices is scarce for consumers lately. General inflation indicators have reached the highest rates in decades. The vagaries of the weather and climate change can now cut them off at least a temporary break. Several states experienced some of their hottest December days on record. The temperature in Central Park hit 61 degrees on Monday.
According to the National Oceanic and Atmospheric Administration’s Climate Prediction Center, above-average temperatures in the south and most of the eastern United States could prevail for most of this winter.
Jon Gottschalck, head of the operational forecasting arm at NOAA’s Climate Prediction Center, said these milder conditions would be the result of the recent development of atmospheric conditions known as La NiÃ±a. But he warns that all forecasts are “probabilistic”, not certainties, and that severe “volatile” cold spells should still be expected in the coming months.
In its short-term energy outlook released on Tuesday, the US Energy Information Agency noted that “the changing effects of consumer behavior on energy demand due to the pandemic show a wide range of potential results for energy consumption “.