U.S. Natural Gas Prices Doubled Year-over-Year in June

By Christian Roselund

While prices for solar and wind have been rising in the United States, recent data from the U.S. Department of Energy indicate that natural gas prices have been rising faster. The U.S. Department of Energy’s Energy Information Administration (EIA) reports that prices at Henry Hub in Louisiana, which set a benchmark price for U.S. gas prices, have increased 101% from $3.84 per million British Thermal Units (MMBtu) in July 2021 to $7.70/MMBtu in June 2022.

This June price shows a slight decline from prices of $8.17/MMBtu in May 2022, the highest price since November 2008. EIA states that prices have generally increased since mid-2021 as “demand growth has outpaced domestic production growth, keeping inventory levels low.”

An important driver of sharply rising gas prices in the United States is the growth of liquefied natural gas (LNG) exports. The nation has now surpassed both Qatar and Australia as the world’s largest exporter of LNG. EIA notes that due to this increased domestic and global demand, the United States entered April 2022 with the lowest natural gas storage level in almost three years. Further reflecting the connections between U.S. and global markets, a fire at the Freeport LNG terminal in Texas in early June has both reduced gas prices for U.S. consumers and raised EU gas prices.

These increases in the wholesale price of natural gas are being felt at the retail level as well. The most recent Consumer Price Index (CPI) report shows the price of utility gas service rising 38.4% year-over-year. This is the third-steepest increase among the consumer goods considered. CPI also showed that retail electricity prices have increased 13.7% year-over-year, the
fourth-sharpest increase.

Source: U.S. monthly average Henry Hub spot price nearly doubled in 12 months (Today in Energy, EIA)