Former Trump Energy Secretary Dan Brouillette explains how America can create global demand for more natural gas and oil.
Natural gas prices rose more than 20% on Monday after a flurry of forecasts over the weekend predicted incoming Arctic air could set the US up for its coldest January in a decade or more.
Although prices pulled back somewhat the next day, the market’s big gains this winter may not be over.
The price of natural gas rose this week after forecasts that the US and Europe could face a harsher winter than previously expected. (Silas Stein Alliance/photo via Getty Images/Getty Images)
Phil Flynn, an energy market analyst and FOX Business contributor, says America has abundant supplies of natural gas built up, which is a good thing. The problem, he says, is that the US has also been complacent on the demand side when it comes to cold weather, because the country really hasn’t seen the kind of severe winter predicted for a long time.
He explained that the prolonged period of bitter cold that is forecast would not only increase demand and deplete storage – perhaps at the fastest pace we have ever seen – but risk disrupting production.
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“When you get a cold event like this, not only do you see record demand, but then you have the possibility of freezing the infrastructure,” Flynn said in an interview. “They have to shut down the wells because it’s too dangerous to produce.”
Snow-covered transfer lines leading to storage tanks at a liquefied natural gas (LNG) terminal. (REUTERS/Gary Cameron/Reuters Photos)
It’s not just the US that could be affected. Some forecasters say Europe could be in for a colder winter due to the polar vortex, too, and that region is already seeing high natural gas prices as reserves are being depleted faster than usual.
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At the same time, Russian gas giant Gazprom is scheduled to stop all pipeline gas shipments transported through Ukrainian pipelines to other European countries after its five-year contract expires.
Flynn said that’s another reason President Biden’s pause on liquefied natural gas (LNG) export permits is “just ridiculous.”
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Markets are reacting to all these factors. So what does this mean for the consumer?
Flynn says when the price of natural gas jumps like this week, it usually takes several months for those increases to reach consumers depending on what part of the country they live in and how their local utilities work.
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Regardless, when temperatures drop, Americans living in cold-affected areas can expect to see their utility bills rise almost immediately because they tend to turn up their thermostats and run their heaters during around the clock.
“Consumers are feeling it, mainly because they’re using more and prices are going up as well,” Flynn told FOX Business. “It’s a double whammy.”
