Wholesale natural gas prices are expected to be about twice as high as they were last year, according to a forecast from the U.S. Energy Department. The White House as already proposed some relief for low-income families. Photo by Bill Greenblatt/UPI | License Photo
Nov. 9 (UPI) -- Utility bills could be dramatically higher than last year as the wholesale price for natural gas headed into the winter heating season stays elevated, the U.S. Energy Department said.
The Energy Information Administration, part of the Energy Department, said it expected the wholesale price of natural gas, as indicated by the benchmark Henry Hub, will average $6 per million British thermal units (MMBtu) over both the fourth quarter of 2022 and the first quarter of 2023.
EIA's forecast, while high, is about $1 per MMBtu lower than the forecast from the agency's monthly report from October. That said, Henry Hub averaged $3.91 per MMBtu for all of 2021 and should average $6.49 for full-year 2022.
The outbreak of war in Ukraine in February put a substantial premium on the price of major commodities such as crude oil and natural gas. Western powers have largely shunned Russian fuels since the invasion began, sidelining one of the world's major producers. That means other major oil and natural gas producers such as the United States and Norway are filling the void.
EIA in its pricing forecast noted that domestic inventories of natural gas are about 4% below the five-year average for this time of year. Given the growing demand for non-Russian supplies, EIA said the supply-side shortage in the domestic market is a reflection of the increase in demand for liquefied natural gas exported from the United States.
But domestic production of natural gas is on pace to increase, which could eventually pull prices back toward seasonal norms. U.S. natural gas production has been on the rise for much of the year and should improve by about 2% in 2023, relative to the expected average for this year.
"After the winter, we expect the Henry Hub price to decline in 2023 as production growth outpaces both domestic consumption and LNG exports," the EIA's report read.
That should be a relief to U.S. consumers struggling with a high level of inflation. The price for all consumer goods increased 8.2% during the 12-month period ending in September. For just energy, however, inflation is closer to 20% for the year.
The White House last week said it will make $13 billion available to help support low-and medium-income households pay their energy bills and find ways to make their homes more energy-efficient. On Wednesday, a utility overseer in Minnesota encouraged residents to sign up for a program that supports those who may be struggling to pay their bills.