Natural Gas Prices Fall Yet Heating Bills Likely Stay High

Despite normal trends in natural gas prices that result in higher prices this time of year, natural gas producers have seen a production boom which has lowered gas stocks to the lowest price since July. Last year’s chill depleted natural gas reserves to lows not seen in a decade, driving natural gas prices up. The market has been affected by last year’s low natural gas stockpiles well into spring and summer. Concerns of the industry’s ability to replenish stores ahead of winter drove up prices to 11% higher through the warmer months than the year before. Natural gas producers have been producing at higher than normal rates with the prices increased in the summer. Though the prices have now been driven down by what can be considered a natural gas glut, utilities will continue to sell the higher priced gas that the was purchased during the summer months. This means consumers will see a 6.8% increase in their heating bills compared to this time last year, according to the U.S. Energy Information Administration.

Most people probably didn’t envision we’d have such a fast restocking of natural gas,” said Darwei Kung, manager of Deutsche Bank AG’s DWS Enhanced Commodity Strategy Fund

The higher heating bills are not as bad as it could have been, with the USEIA’s price predictions having fallen since their summer estimates. The price of heating will continue to rise throughout the winter but consumers will likely see a less dramatic rise this year. This year prices are expected to increase by 7% over the winter, markedly less than the 17% increase that has been the average for the past five years between October and February. Consumers can expect higher prices especially in the outset of the winter but altogether lower heating bills due to what is expected to be a fairly mild winter.

 

Read More – Natural-Gas Prices Fall Even With Chill Nearing (Wall Street Journal, Timothy Puko)

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Originally from Gaithersburg, Maryland, Millan is a senior at the George Washington University studying Biological Anthropology.

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