In the Northeast this summer natural gas prices are expected to rise due to increase demand. Some experts are saying natural gas in the Northeast may average $5-$5.50 per million British thermal units (MMBtu) or even in the $7-$8 per MMBtu range. Natural gas prices at Algonquin City Gates, the pipeline system that delivers gas to New England, have been less than $5 from 2009-2012. The companies (Kinder Morgan Energy Partners LP, Spectra Energy Corp., and Williams Cos.) that own the Northeast’s main pipelines say they are currently running at or near capacity. Natural gas futures prices have seen a substantial increase since the beginning of the year and reached $4.50 per MMBtu on May 1.
Algonquin City Gates gas rose to a premium of $30.82 per MMBtu at the Henry Hub in Erath, Louisiana on January 24. Spot prices soared to $34.28 per MMBtu. Both figures are nine-year highs. Cold weather in January helped raise prices. So too could hot weather in the summer, causing a spike in prices, as utilities need fuel to power air conditioners; however, these increases may be limited if power generators switch from gas to coal or if the U.S. begins to import from Canada again.
In its April 9 Short-term Energy Outlook, the Energy Information Administration reported that natural gas-fired electric plants surged by 51 percent to 554,000 MWh per day in 2012 from 2008. The EIA expects electricity from gas-fired plants to decrease very slightly in 2013 (535,000 MWh per day), which will still make up a large percentage of the total electricity output in the region. Prices at the Henry Hub have dropped substantially since 2008 as fracking has made drilling more economically efficient. Despite this price drop, New England has become more reliant on natural gas, and perhaps dangerously so when the storage levels are considered. Storage in the East region over the past couple of months has been well below the year-ago level and the five-year average. The most recent EIA weekly natural gas report saw that despite a strong increase in storage, the East region still sat at 910 billion cubic feet (Bcf) for the week ending May 24, 31.0 percent below the year-ago data (1,319 Bcf) and 10.8 percent below the five-year average (1,020 Bcf).