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Home LATEST NEWS The Impact of Global Natural Gas Shortages on the US: NPR

The Impact of Global Natural Gas Shortages on the US: NPR

US natural gas prices are soaring as suppliers increase exports to Europe, which no longer receives natural gas from Russia. How expensive will it be for Americans to heat their homes this winter?



JUANA SUMMERS, HOST:

If running your air conditioner seemed expensive this summer, heating your home this winter may be even worse. Natural gas prices are skyrocketing in the US and are expected to continue rising.

For more, we’re joined by NPR’s Arezou Rezvani, who covers energy markets. Hello.

AREZOU REZVANI, BYLINE: Hello, Juana.

SUMMERS: So help us understand. Why are these natural gas prices so high?

REZVANI: Well, there’s a lot less in the world these days, and that’s because of Russia. For years, Russia supplied Europe with natural gas, but has cut supplies in recent months. And so there is much less on the market, while global demand has remained high. I mean, here in the US, 40% of the nation’s energy comes from natural gas. Half of households use it for heating. It was also a very hot summer in some parts of the country. People had their ACs working overtime. Mix in the fact that US natural gas inventories fell this year, and all of this together is driving prices up, and I’m talking 300% more than a few years ago.

SUMMER: Wow. IT’S OKAY. So this high level of demand, we’re not that far from winter, is it going to continue?

REZVANI: That is the expectation. And we are likely to feel the pressure here because LNG producers in the US are exporting more of their supplies to Europe. I spoke with Ellen Wald of the Atlanta Council about this. She says that US growers have an incentive to export.

ELLEN WALD: If the price that they can get in Europe is much higher than the price that they can sell their natural gas for in the US, then some of that natural gas will be exported to Europe, and that will increase the price of things in the United States. Not to the levels that we’re seeing in Europe, but yes, we could continue to see higher energy costs in the US because of this.

REZVANI: So clearly there is a profit opportunity for US producers right now. But there is also a geopolitical argument for increasing exports to Europe. The EU is a big trading partner, and big economic shocks could be replicated here in the US.

SUMMER: Okay. So what does all this mean for people’s energy bills? How much could they be going up?

REZVANI: Yes, it could go up a lot. There are estimates that the average family can pay more than $1,200 to heat their home this winter. That’s $175 more than last year, which is remarkable considering that nearly 40% of Americans feel financially strapped, according to a new NPR/Marist poll released today. For homes in the US that use natural gas, their electricity costs could rise by a third, which could keep inflation high. Texas is the state that consumes the most natural gas. That’s where most people saw the biggest jumps in their bills. But I should mention that the US could avoid the worst of this price increase if it is a mild winter.

SUMMER: Okay. That’s a big yes. Arezou, how long could all this last?

REZVANI: You know, a lot of that depends on whether Russia turns the gas taps back on for Europe this winter. Another important factor is how quickly Europe can find new gas sources. Agathe Demarais of The Economist Intelligence Unit says it will be difficult to achieve but will be worth it in the long run.

AGATHE DEMARAIS: Europe will be in a better place because it will have completely rid itself of its dependence on Russian gas. So we expect most of the pain to be concentrated in late 2022, early 2023 in many European countries. But after a few years, Russia will no longer be able to arm gas supplies.

REZVANI: In conclusion, these high prices may remain for a while.

SUMMERS: That’s Arezou Rezvani from NPR. Thank you very much.

REZVANI: You’re welcome.

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