Continued upward pressure on Natural Gas prices means pricier electricity for Americans. This is a long term situation if we remain addicted to fossil fuels and vulnerable to global markets:
- U.S. electricity bills are expected to rise 4% this summer, reaching a nationwide average of $186 per month.
- New England faces the biggest jump in monthly bills, up 6.7% to $200, due to limited gas pipelines and high energy prices.
- Natural gas demand is surging in the summer for electricity generation, with power plants accounting for 41% of U.S. consumption.
Americans can expect to pay more to stay cool this summer thanks to forecasts for above-average temperatures across the country and natural-gas prices that are heading into air-conditioning season 37% higher than last year.
On average, Americans should count on their electricity bills in June, July and August rising 4% from last year, mostly due to more expensive natural gas, according to the Energy Information Administration.
That would bring the nationwide summertime average to $186 a month, up from $180 last year and $148 four years ago, the EIA said.
New England—where a dearth of gas pipelines keeps energy prices among the highest in the country—should see the biggest jump in monthly bills, up 6.7% from last year, to about $200. The Pacific Coast is among the few places where lower bills are expected, down 1% from last summer, to an average of $176.
Summer has become a big second season for natural gas. The most gas gets burned in winter, in furnaces and boilers for heat as well as in power plants. But the amount of gas burned to generate electricity during the summer has surged in recent years, even as renewables have proliferated.
Energy Information Administration:
Natural gas consumption in the electric power sector
Natural gas consumption in the U.S. electric power sector is the primary source of natural gas consumption in the summer, as electricity is used to meet demand for air conditioning during warmer weather months. We forecast natural gas consumed to generate electricity in the United States will average 38.4 billion cubic feet per day (Bcf/d) in June, up 26% from May. U.S. natural gas consumption in the electric power sector in May was down 9% from last year, as milder weather kept consumption levels relatively low.
Our forecast assumes 3% more cooling degree days (CDDs) than the 10-year average across the United States from June through September and about the same number of CDDs as last year during those months. Despite similar temperatures compared with last year, we expect the power sector will consume 3% less natural gas this summer than it did last summer. The drop in natural gas-fired generation largely reflects our expectation that natural gas prices will be higher this summer compared with last year. We expect the price of natural gas delivered to the power sector to average about $3.84/MMBtu from June through September, $1.39/MMBtu more than that period in 2024. At the same time, the price generators pay for coal will be almost unchanged.
The increasing availability of electricity generation from renewable sources also constrains growth in natural gas consumption beyond last year’s levels.
Trump administration plans to vastly increase US gas exports are another primary driver of higher prices.
Asia’s currently tepid LNG demand is set to become robust during the summer months as models suggest higher-than-usual temperatures across north Asia.
A rise in Asian demand will support increased U.S. exports of liquefied natural gas, which are already at record highs, Reuters columnist Gavin Maguire notes.
Early this month, Asian spot LNG prices for delivery into northeast Asia fell for the first time in five weeks as demand is weak while inventories are high, according to industry sources quoted by Reuters.
However, as we move into the hottest summer months, rising temperatures will boost gas demand for power generation to meet air conditioning demand in Japan, South Korea, Taiwan, and Hong Kong. These are set to see average temperatures about 5-6% higher than the long-term average through August, according to data from LSEG cited by Reuters’ Maguire.
Earlier this year, strong demand in Europe pushed U.S. LNG exports higher.
“Despite similar temperatures compared with last year, we expect the power sector will consume 3% less natural gas this summer than it did last summer.”
I wonder why.