Former Trump Energy Secretary Dan Brouillette explains how America can create global demand for more natural gas and oil.
Natural gas prices jumped more than 20% on Monday after a flurry of forecasts over the weekend. incoming arctic air could prepare the United States for the coldest January in a decade or more.
Even if prices retreated slightly the next day, the market’s strong gains this winter may be far from over.
The price of natural gas jumped this week on predictions that the United States and Europe could face harsher winters than expected. (Silas Stein/alliance photo via Getty Images / Getty Images)
Phil Flynn, energy market analyst and RENARD Company contributor, says America has abundant natural gas reserves, which is a good thing. The problem, he says, is that the United States has also been complacent when it comes to cold weather demand, because the country hasn’t really experienced the type of harsh winter expected for a long time .
He explained that the expected prolonged period of freezing cold would not only increase demand and deplete stocks – perhaps at the fastest rate we have ever seen – but also risk disrupting production.
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“When you face a cold event like this, not only do you see record demand, but you also risk an infrastructure freeze,” Flynn said in an interview. “They have to close the wells because it’s too dangerous to produce.”
Snow-covered transfer pipes leading to storage tanks at a liquefied natural gas (LNG) terminal. (Reuters/Gary Cameron / Reuters Photos)
The United States is not the only one affected. Some forecasters say Europe can also expect a colder winter due to the polar vortex, and that region is already seeing sky-high natural gas prices as reserves are depleted faster than usual.
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At the same time, Russian gas giant Gazprom is expected to interrupt all piped gas deliveries shipped via Ukrainian pipelines to other European countries, after its five-year contract expired.
Flynn said that’s another reason why President Biden’s pause on liquefied natural gas (LNG) export permits is “just ridiculous.”
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Markets react to all of these factors. So what does this mean for the consumer?
Flynn says that when the price of natural gas increases as was the case this week, it typically takes a few months for these increases to reach consumers depending on what part of the country they live in and how their local utilities operate.
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Regardless, when temperatures drop, Americans living in areas affected by the cold snap can expect to see their bills increase almost immediately from usage alone, as they tend to turn up their thermostats and their heaters work 24 hours a day.
“Consumers are feeling it, mainly because they’re consuming more of it and the prices are going up as well,” Flynn told FOX Business. “It’s a double whammy.”
