According to government data, U.S. production fell sharply during the pandemic, and only now has begun to slowly return.
Natural gas prices in the U.S. more than doubled since the start of 2021, and they could increase another 25 percent over the summer, according to analysts.
“In the last month, there has not been a meaningful uptick in U.S. lower 48 states production,” Matt Palmer, senior director for North American natural gas at S&P Global Commodity Insights, recently told CNBC. “You’re seeing exports running full out on LNG; power burn from the power sector is really strong and layer in the heat we’re seeing and … that’s a recipe for higher prices.”
Natural gas futures for June reached $8.30 per million British thermal units (MMBtu), up 123 percent on the year, according to CNBC. The outlet noted that U.S. businesses and consumers must contend with those higher natural gas prices even as gasoline and diesel fuel sell at record levels.
Even Higher Prices in Europe
Although prices have shot up in the U.S., Europeans have it worse. CNBC said European natural gas prices remain about four times higher that U.S. prices. Some of that overseas rise relates to the conflict with Russia, which supplies about a third of Europe’s gas.
According to government data, U.S. production fell sharply during the pandemic, and only now has begun to return — albeit slowly. In February, monthly production was 115.2 billion cubic feet per day, down from 118.7 BCF in December, according to government data.
Analysts also note that tight supplies have contributed to higher prices. The amount of gas in storage has been at unusually low levels, and cold spring weather followed by a heat wave has created more demand. These factors combined have made it more difficult to build inventories, according to CNBC. The network noted that storage levels are 18 percent lower than last year and 16 percent lower than the five-year average.