May 9, 2022 - Economy

Electricity costs to heat up in coming months

Data: FactSet; Chart: Axios Visuals

U.S. natural gas soared last week, as the war in Ukraine continues to inject a fear premium into global energy markets.

Driving the news: Prices for U.S. benchmark Henry Hub natural gas — named for a pipeline junction in Louisiana where physical delivery occurs — jumped more than 10% last week alone, to over $8 per metric million British thermal units.

Why it matters: Natural gas is the fuel for about 38% of American electricity generation — so higher natural gas prices mean higher electricity prices.

The bottom line: Electricity prices were already up 11% from the prior year as of March, according to the latest Consumer Price Index. That's the fastest one-year rise since 2006. Don't expect any relief over the next few months.

Go deeper