Natural gas price explodes
Natural gas prices have nearly doubled in the past 12 months, reaching $5.06 per million British Thermal Units (BTUs) early Friday morning. (A BTU is the amount of energy required to raise the temperature of one pound of water by one degree Fahrenheit.) It has been over 12 years since prices were this high, and they could fly sharply higher in the event of a colder than usual winter. Gas, which is the main source of home heating in the U.S., is also used to generate electricity for manufacturing industrial products, chemicals, and fertilizers.
Supply shortages and demand increases are responsible for the increase. The supply side was threatened by production shut-downs in the Gulf from hurricane Ida and earlier storms right as total gas in storage was significantly below average. The excessive heat in many areas increased gas use to make electricity for air conditioning. Meanwhile, Europe is facing an acute shortage. Germany is negotiating to buy their gas from the new Russian pipeline. Russia is Europe’s largest gas supplier, making many countries vulnerable to political problems with Putin. Natural gas for delivery in October traded at $4.97 per million BTUs on Friday.
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