Natural gas prices spike on forecasts of colder than expected winter

Natural gas prices rose more than 20% on Monday after a flurry of predictions over the weekend. incoming arctic air The US could bring its coldest January in a decade or colder.

Although prices retreated somewhat the next day, the market’s major rallies this winter may be far from over.

Natural gas prices rose this week after forecasts that the US and Europe could face harsher-than-expected winters. (Silas Stein/Image Alliance via Getty Images/Getty Images)

Phil Flynn, energy market analyst and FOX Business: The investor says America has plenty of natural gas, which is good. The problem, he says, is that the U.S. has also been complacent when it comes to cold weather because the country is, indeed, has not seen such a harsh winter in the forecast for a long time.

He explained that the prolonged period of bitter cold that is forecast will not only increase demand and deplete storage at possibly the fastest rate we have ever seen, but risks disrupting production.

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“When you get a cold event like this, not only do you see record demand, but you have the opportunity to freeze the infrastructure,” Flynn said in an interview. “They have to shut down the wells because it’s too dangerous to produce.”

Snow covered transmission lines leading to storage tanks at the liquefied natural gas (LNG) terminal. (REUTERS/Gary Cameron/Reuters Photos)

It’s not just the U.S. that could be affected: Some forecasters say Europe could also expect a colder winter due to the polar vortex, and the region is already seeing higher natural gas prices as supplies run out faster than usual.

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Meanwhile, Russian gas giant Gazprom is slated stop all gas supplies shipped through Ukrainian pipelines to other European countries after its five-year contract expired.

Flynn said that’s another reason President Biden’s suspension of liquefied natural gas (LNG) export permits is “just ridiculous.”

Markets are reacting to all these factors, so what does this mean for the consumer?

Flynn says when the price natural gas flights, as it did this week, it usually takes several months for those increases to reach consumers, depending on where in the country they live and how their local utilities work.

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Regardless of when the temperature drops, Americans living in cold-affected regions can expect their bills to rise almost immediately due to usage alone, as they tend to turn up their thermostats and leave their heaters running around the clock.

“Consumers are feeling it mainly because they’re using more, and prices are going up,” Flynn told FOX Business. “It’s a double whammy.”