What do rising natural gas prices mean for NJ customers this winter?
Prices at the pump have begun to level off in New Jersey as the fall begins, slowing an upward climb that left the price of a gallon of regular gas more than a dollar more this past summer than in 2020.
But as the weather gets colder, a different type of fuel may be of concern. The Wall Street Journal recently reported that natural gas prices have doubled in the U.S. in the last six months.
The situation is even more dire in Europe, according to Alan Lammey, IHS Markit senior market analyst, where trading is now in the neighborhood of $26 per million British thermal units.
In the U.S., the price is closer to $6 per million BTUs, but that's a level this country hasn't seen since 2014 — and Lammey said things could get even worse, especially around New Jersey, if the weather in December, January, and February turns out to be harsh.
"Particularly the eastern third of the United States, it could result in significantly higher natural gas prices, particularly spot prices, in that region of the country," he said. "There could be a real issue with the amount of storage needed to get through this winter, and it could prop up the prices even more."
Much of this still relates back to the very beginning of the COVID-19 pandemic, when demand plummeted, Lammey said, but increased reliance on fracking and a de-emphasis on coal in the last decade have also been key factors.
Plus, he said, the U.S. has become a net exporter of liquid natural gas for the first time ever, and with the country's population growing by about 4 million annually, supply and demand are being thrown out of balance.
"That's a lot of people, annually, growth, and that's a lot of demand that that population growth puts on different, various fuels," Lammey said.
Our modern focus on green energy sources is a good thing, Lammey said, but we're not yet where we need to be from a sustainability standpoint.
Energy customers need to keep their lights on and their homes heated, and as Lammey put it, to cancel what else we have available is short-sighted.
"Until we get there, you have to have the reliability of what we've always had in order to be able to make sure that prices stay low," he said.