For January–July 2022, the nominal residential price averaged $13.25 per thousand cubic feet (Mcf), 25% higher than for the same period in 2021. The commercial price averaged $10.50/Mcf, which was 33% higher. In several months this year, the Henry Hub spot price was essentially double the 2021 price for the same month. Record-high liquefied natural gas (LNG) exports have been a growing source of natural gas demand.
ERCOT electricity prices vary more with changes in wind power than with electricity demand
ERCOT’s wholesale power market experienced significant peak-load growth in recent years (16% over the last decade) and significantly increased its wind generation (from 9% of the electricity generation mix in 2011 to 24% in 2021). High levels of electricity demand and low wind availability are two significantly factors that raise wholesale prices in ERCOT. When combined, these factors can lead to especially sharp price spikes during summer peak-day conditions.
In 2021 U.S. natural gas-fired power generation declined for the first time in four years
After peaking in 2019, the annual US consumption of natural gas has been on a slight decline. Starting with reduced economic activity in 2020 Natural gas was unable to rebound in 2021 as prices doubled and power generators opted to use cheaper fuels such as coal. The broader trend of coal plants being shut down in favor of natural gas generation is expected to continue and annual US consumption should increase by 5% in 2022 reversing this downward trend.
East region working natural gas in storage is the lowest in five years ahead of the 2022–2023 winter heating season
As we move into the 2022-2023 winter heating season the east region of the United States (from Florida to Maine) is 9 percent below the five-year average compared to 3% below the five-year average a year ago. The deficit resulted from this past summer being the third hottest on record making it difficult to inject while meeting generation demand. As LNG capacity and local production increased the northeast has become less reliant on natural gas storage to meet winter demand.
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