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Natural Gas Bills Will Increase While New England Faces Possible Winter Blackouts as Supplies Tighten

Natural Gas Bills Will Increase While New England Faces Possible Winter Blackouts as Supplies Tighten

All winter fuels will increase this season but natural gas will have the most significant impact.

The U.S. Energy Information Administration (EIA) warned that consumers will pay more for natural gas this winter.

The data for other winter fuels will increase this winter as well:

NOAA’s winter weather forecast predicts a winter colder than 2021 “and the average winter for the previous 10 winters.”

From EIA:

In our latest Winter Fuels Outlook, we forecast that U.S. households that primarily use natural gas for space heating will spend an average of $931 on heating this winter (October–March), which is 28% (or $206) more than last year.

Natural gas is the primary heating fuel for 47% of U.S. homes, according to the U.S. Census Bureau’s 2021 American Community Survey. The retail price of natural gas and the amount of natural gas consumed determine how much households spend on winter natural gas bills.

EIA predicts retail natural gas prices will rise 22% to $15.95 per thousand cubic feet (Mcf).

The Midwest will likely have the most significant price increase to $13.80/Mcf. That’s 27% more than what those people paid last winter.

New England and Natural Gas Supplies

On top of that, New England risks blackouts due to a shortage of natural gas supplies. EIA mentions the lack of natural gas inventories, which affects its predictions.

The working natural gas inventories are “6% below the previous five-year average”:

Working natural gas inventories in our forecast reach almost 3.5 trillion cubic feet (Tcf) by the end of October, which would be 6% below the previous five-year average. U.S. natural gas storage injections usually take place from April through October, although injections often occur in early November, depending on temperatures and market conditions. Storage withdrawals typically occur from November through March. U.S. natural gas inventories began this injection season at the lowest level in three years because of high heating demand in January and record LNG [liquified natural gas] exports. The above-average withdrawals last winter, combined with more-than-average consumption this summer, contribute to our forecast for below-average storage inventories heading into the winter heating season.

Although both spot and retail natural gas prices are higher in our forecast than last winter, under the baseline temperature case for this winter, we forecast draws in natural gas inventories will be less than the five-year average because we expect that increased demand this winter will be more than offset by growth in natural gas production. We expect U.S. dry natural gas production will be 2.8 Bcf/d (3%) higher than last winter. Our forecast for combined growth in consumption and exports this winter is 3.0 Bcf/d (3%). By the end of March 2023, we expect natural gas inventories to be 1.5 Tcf, which would be 7% less than the previous five-year (2018–2022) average.

As inventories narrow the deficit to the five-year average, we expect it will put downward pressure on natural gas prices later in the winter. In our forecast, monthly average Henry Hub spot prices peak near $7.70/MMBtu in January, before falling to around $6.50/MMBtu by March.

New England is especially at risk because the area “relies on natural-gas imports to bridge winter supply gaps.” It is “now competing with European countries” because Russia halted most of the natural gas to the continent. Yikes:

The region’s power-grid operator, ISO New England Inc., has warned that an extremely cold winter could strain the reliability of the grid and potentially result in the need for rolling blackouts to keep electricity supply and demand in balance. The warning comes as executives and analysts predict power producers could have to pay as much as several times more than last year for gas deliveries if severe weather creates urgent need for spot-market purchases.

“The most challenging aspect of this winter is what’s happening around the world and the extreme volatility in the markets,” said Vamsi Chadalavada, the grid operator’s chief operating officer. “If you are in the commercial sector, at what point do you buy fuel?”

Power producers in New England are limited in their ability to store fuel on site and face challenges in contracting for gas supplies, as most pipeline capacity is reserved by gas utilities serving homes and businesses. Most generators tend to procure only a portion of imports with fixed-price agreements and instead rely on the spot market, where gas prices have been volatile, to fill shortfalls.

John Pettigrew, the head of the National Grid in the United Kingdom, warned the British they face blackouts “in the late afternoon to early evening.” The blackouts would affect households, businesses, and hospitals.

The natural gas forecast is bleak across the mainland:

Analysts put the gas shortfall at almost 15% of average European demand in winter, meaning the continent has to cut consumption to get through the peak demand heating season.

“The situation will remain very fragile,” Cuneyt Kazokoglu, director of energy economics at FGE, said.

“Household gas consumption in Germany jumped at the end of September to the highest level since March because of a cold spell, and demand was about 14% above the 2018-2022 four-year average. This is posing a threat,” he added.

If New England has a mild or moderate winter, the grid could make it through the season with few problems.

But NOAA predicts a cold winter. Hold onto your hats, New Englanders!

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Comments

UnCivilServant | October 19, 2022 at 7:07 am

New York needs to start Fracking – and not selling any of it downstate.

You can’t put a price on saving the planet. The bounty of resources on the planet is no longer available for human exploitation. Gaia is unhappy.

    livefreeorpie1791 in reply to Pasadena Phil. | October 19, 2022 at 7:56 am

    Yeah, and we can’t prove a negative, so give us your liberty, let us control you, let us tell you what you can do in your life, while we pigs are living in the farm house, murdered the farmer, and sleeping with his wife. If Gaia is so POed, why are all the climate crisis pushers living on the coast, and flying private jets? Really, especially since Steven Spielberg used 113,000 gallons of fuel in his jet in one month. It just so happens that my Honda wouldn’t use that much fuel if I drove it for forty years. The science doesn’t matter. The hypocrisy is all I need to know.

    retiredcantbefired in reply to Pasadena Phil. | October 20, 2022 at 1:46 pm

    /s

I expect to hear *a lot* about the evil price-gougers this winter.

Not a lot about building pipelines, or drilling for more gas.

    MattMusson in reply to clintack. | October 19, 2022 at 7:52 am

    A company I am working for tried to build a pipeline from West Virgina gas fields to the Atlantic Coast to serve the North and Northeast. After spending almost a billion dollars and receiving over 100 government permits, a Federal Judge ruled we had to get a pipeline permit from the National Park Service because the pipeline ran under the Appalachian Trail.

    There are a hundred of pipelines that run under the Trail. None were ever permitted and the National Park Service has never issued a pipeline permit. And, the NPS has not process for application and permitting.

    That is what finally killed the Atlantic Coast Pipeline. And, it ensured that there would be natural gas shortages across the NorthEast.

Burning lots of smoky wood this winter!! Wife cranky since I keep the thermostat down though.

Frigid wife, unhappy life…. in all sense of the word.

    MattMusson in reply to Dimsdale. | October 19, 2022 at 7:54 am

    Just FYI – cutting and burning cord wood returns 5 units of energy for every unit invested.
    That is approximately the same return as commercial Wind and Solar farms.

    You cannot sustain a civilization by chopping wood, or by Wind or Solar.

      CommoChief in reply to MattMusson. | October 19, 2022 at 9:42 am

      So girl, leave your boots by the bed, we ain’t leaving this room

      Til someone needs medical help or the magnolia bloom

      It’s cold in this house and I ain’t going out to chop wood

      So cover me up and know you’re enough to use me for good

“Hold onto your hates, New Englanders!”
Typo?
Subliminal?

    Mary Chastain in reply to lc. | October 19, 2022 at 7:53 am

    Typo. Thank you for pointing it out!

    henrybowman in reply to lc. | October 19, 2022 at 3:31 pm

    When Putin cut Europe off, some guy in Russia put a webcam online showing a burner on his gas stove running 24h as a FU to the Europeans.
    The folks in New England are going to be needing some cheap entertainment this winter.

“Let them freeze in the dark” was a Texas saying in the 70s when New England needed Texas fuels in the first oil crisis. Apparently higher bid prices lured the necessary fuel away regardless.

    MattMusson in reply to rhhardin. | October 19, 2022 at 7:57 am

    That phrase became popular after Jimmy Carter nationalized the inner state Natural Gas in Texas that sold for $1.25 per MCF and sold it in Pennsylvania for 35 cents per MCF during his second Presidential Campaign.

Louis K. Bonham | October 19, 2022 at 8:13 am

And at the same time gas producers in the Permian Basin are struggling to get their gas to market . . . .

If only there was an efficient, economical way to deliver massive quantities of domestically-produced natural gas 24/7 to New England, so that both producers and consumers would benefit . . .

Oh yeah, there is. It’s ancient technology called a pipeline. And gas pipelines are typically built in conjunction with long term, locked in contracts with the gas producers and utilities that protect consumers from the need for their utility to have to buy gas on the spot market (and give producers the long-term economic stability of knowing all the gas produced from particular wells/fields is under contract).

Most of the rest of the country gets this. But no, smarter-than-thou New Englanders (and the wokesters at capital sources such as Blackrock who have blacklisted the energy sector) decided building new gas pipelines to supply that region with gas would be oh so icky . . at the same time they decided to shutter some of their nuke plants.

Hard for me to have much sympathy for New England when the consequences of their actions have been so obvious and foreseeable. Enjoy your wood stoves and the associated smog this winter.

    Pipelines you say. Tell me more! If they are just big straws, those are outlawed.

    stevewhitemd in reply to Louis K. Bonham. | October 19, 2022 at 11:13 am

    Indeed, the New Yorkers and New Englanders have been positively … European … on this issue, right down to the demand for wood-burning stoves this winter.

    It’s another illustration of the old understanding that you can’t save people from themselves. New England doesn’t want to be saved — they have their beliefs and prejudices, and they’d rather shiver and blame hoarders, wreckers, and kulaks this winter. So that’s how it’s going to be.

If only we could arrange it so only the libs freeze to death.

    henrybowman in reply to Othniel. | October 19, 2022 at 3:35 pm

    If NY/NE is filling itself with yuppie woodstove newbies, it’s more likely a bunch of them are going to end up burning to death instead.

FJoe Biden said that if Republicans win it will get worse….True-True but unrelated. The Dems demolition of the country will be blamed on everyone but them.

I am sure that the media will report an increase from $800 to $1000 as 8.2% inflation.

Democracy good and hard. At least New Englanders can be comforted by the absence of President Trump mean tweets while they are shivering in their homes.

Progressive prices forced by Green (i.e. intermittent/unreliable) deals, regulatory excess, redistributive change, and political convenience.

BierceAmbrose | October 19, 2022 at 2:20 pm

Conveniently, EPA regulations “restricting” wood stoves to the point of banning most, come online (sic — ed) in January. Funny how that worked out.

I just can’t bring myself to feel the slightest big sorry for these people. They could have cheap, plentiful natural gas if they had allowed one thing. That one thing is a pipeline from western PA to the northeast, the Marcellus shale overproduces natural gas by so much that they use it as an industrial feedstock for plastics and, of all things. motor oil.

Possible Blackouts this winter in New England? It is so unjust that they should realize some of the fruits of their woke policies. What next … illegal aliens flown into New England from FL or TX??

Subotai Bahadur | October 19, 2022 at 5:12 pm

I admit that I have absolutely no sympathy for those in Leftist areas who freeze to death because of their own political policy choices. They cannot be reasoned with. They do not accept reality if it conflicts with their ideology. The laws of physics are considered to be oppression by them.

Mind you, it will not affect the political alignment of those areas, because those who die will still be voting in Leftist areas for at least a decade after death, with the help of those Leftists that survive. But the Northeast is a start.

Subotai Bahadur

That chart is severely flawed.
$2500 for the entire winter for heating oil? I wish!!
Right now heating oil in Maine is $5.50 gal and it isn’t even heating season yet!
The avg tank is about 200 gal. That’s $1100 for on fill and a lot of us have our hot water off the furnace which means we will fill up 4 to 5 times by April. That’s $4400 – $5500 for the winter.
Let’s go Brandon!