Heat wave pushes natural gas to 14-year high
- Matt Phillips, author of Axios Markets
With a heat wave baking Texas, residents have turned up their air conditioning in recent weeks — helping send natural gas prices to their highest level in 14 years.
Driving the news: U.S. natural gas futures soared Tuesday, with benchmark futures prices — known as "Henry Hub" — rising 10% over the last week to close Tuesday at $9.29.
- Natural gas prices are up over 150% this year.
- The recent surge coincides with a heat wave sweeping the American West, especially Texas.
Why it matters: Natural gas is the largest source of fuel for power production in the U.S., with a roughly 40% share.
- Americans' utility bills are almost certainly going to rise sharply.
The big picture: The surge in U.S. natural gas prices is part of a much broader global story. With supplies from the world's largest producer — Russia — increasingly in doubt, American exports of natural gas to Europe have grown but production in the U.S. hasn't, leaving relatively low supplies.
The bottom line: Unless natural gas prices reverse fast, electricity bills are going to be putting upward pressure on inflation in the coming months.