Where Does Gas Go From Here?
Happy New Year! I trust that all of you had a pleasant Christmas/Holiday break with family and friends. It is now time to implement those goals and objectives for 2022. The first bit of good news is that your electric and natural gas invoices show little change from last year…the reason? Your third-party supply rate is giving you budget certainty and a hedge over the real-time 25% to 30% increase in electric and natural gas supply rates. Multiple factors contribute to the hike with the major one being Producers keeping natural gas supply flat.
Source: EIA
We have been conditioned with low rates over the last 7 years with natural gas trading at an average of $2.65/Dth, in 2021, the price was $3.91. The question is: how long do we expect high rates to last? The Energy Information Administration (EIA) - a Federal Agency that focuses on Energy market data, is forecasting the Henry Hub to remain above $4.00 in 2022 and a bit lower in 2023.
THREE CONTRIBUTING FACTORS SUPPORT EIA’S FORECAST:
1. Producers to continue the policy of supply restraint.
2. Increase in US exports of Liquefied Natural Gas.
3. High gas prices in Asia and Europe.
Today, we do see opportunities to renew third-party supply during the shoulder seasons of May and September, but the weather may have other plans. I am happy to share that one of my goals in 2022 is to keep close contact with Mother Nature.
Your Friendly Neighborhood Energy.