The Labor Department’s Consumer Price Index report for February showed prices rose 2.4% year over year. That was expected, but natural gas prices rose at a much faster pace.
They’re up 10.9% compared to the same time last year. The increase was before the Iran war, which has choked off a fifth of the global gas supply. Lots of American households saw higher heating bills this winter as a result, especially in the Northeast and Midwest.
A big factor is that it was colder than last winter in those areas, said Mark Wolfe, executive director at the National Energy Assistance Directors Association.
“So about half the increase that we’re estimating is from the fact that families just need to use more natural gas,” Wolfe said.
The colder weather and the higher demand came on top of another trend that’s also elevated prices for natural gas — the AI boom.
“The rapid growth of data centers means that we need more electricity, and about 40% of the feeder fuel to produce electricity is from natural gas,” Wolfe said.
A report from the consumer advocacy group PowerLines found that three in five Americans are feeling financially stressed because of rising utility bills. Over the last few months, the cost pressures added up.
Wolfe said aid groups he works with have been reporting a lot more need.
“People that didn’t really pay attention to their utility bills in the past are now paying attention,” he said. “We’re hearing from moderate-income (families), and even some middle class families are asking if there’s any help to pay their bills. We never saw that before. It was usually just the very poor.”
Could the Iran conflict make the situation worse? Well, in Asia and Europe, natural gas prices have been soaring because liquified natural gas exports from the Middle East have been interrupted.
But for the U.S., there’s some good news, said Ken Medlock, professor and energy economist at Rice University.
“North America, not just the United States, has been largely shielded on the natural gas front from what’s going on in the rest of the world,” Medlock said.
That’s because the U.S. actually produces plenty of natural gas, and even exports a growing portion of what it makes.
Tom Seng, assistant professor of energy finance at Texas Christian University, said natural gas prices in the U.S. should actually come down soon.
“We’re almost mid-March, heading into April. April’s, you know, a very much a low demand period for natural gas domestically. That’s kind of helping the situation,” Seng said.
That means Americans are likely to see some relief from the higher bills they’ve been paying. Natural gas prices here in the U.S. should remain relatively affordable, compared to what’s happening in the rest of the world.
