Underlying energy market conditions could signal pain for consumers this winter and beyond – Fox Business | Jewelry Dukan

According to energy economists polled by FOX Business, current conditions in the natural gas market could signal pain for consumers this winter and ongoing problems for years to come.

The experts said the energy crisis in Europe, caused in part by Russia’s invasion of Ukraine, will continue to hurt US consumers through the winter as global gas and oil supplies are tight. They also noted that the green energy push announced by the Biden administration and several state governments will further result in reduced and more unreliable energy supplies and push up future prices.

“The biggest problem is that scarcity in Europe is driving prices up and prices are being set globally,” Diana Angstgott-Roth, the director of the Heritage Foundation’s Center for Energy, Climate and the Environment, said in an interview with FOX Business. “Because natural gas prices are higher around the world, we’re exporting more and that’s driving prices up here.”

“At the same time, we are proposing a set of policies that will stop our companies from producing,” she continued. “Sensible people might think that if there was a natural gas shortage in Europe, the United States would do anything to increase production here.”

EXPERTS BLAME GREEN ENERGY POLICY FOR EUROPE’S OVERALL ENERGY CRISIS: ‘A WARNING TO THE US’

Power lines are pictured in Houston in 2021. (AP Photo/David J. Phillip, File/AP Newsroom)

The National Energy Assistance Directors Association (NEADA) forecast last week that the average cost of heating homes across all fuels, including gas, heating oil and propane, would rise 17.2% this winter compared to last year. The group also predicted that home heating costs would be more than 35% higher than two years ago.

NEADA Executive Director Mark Wolfe said the higher prices would force millions of lower-income families to choose between paying for groceries, medicines and rent.

EUROPE’S GREEN ENERGY POLICY STRENGTHENS PUTIN, SAYS MICHAEL SHELLENBERGER

Mainly driven by higher natural gas prices, electricity prices are also likely to rise compared to the previous year. According to the Energy Information Administration (EIA), consumers are expected to spend nearly 8% more on electricity in 2022 year over year.

“Prices will be higher, particularly for natural gas, in part due to increased demand for liquefied natural gas from Europe and Asia depending on how the weather plays out this winter,” said Benjamin Zycher, economist and senior fellow at the American Business Institute .

An aerial view of suburban homes in California. (iStock)

After the Russian invasion of Ukraine, the European Union (EU) tried to cut itself off from natural gas imports from Russia. Energy producers from Russia were by far the largest suppliers of natural gas to Europe in 2021.

GREEN GROUPS CLAMP DEMS GAS PIPELINE SIDE DEAL AS ‘BETRAYAL’

To fill the gap, the EU struck an agreement with the Biden administration in March to ship an additional 530 billion cubic feet of liquefied natural gas (LNG) to the EU by the end of the year. The US exported 300 million cubic feet of natural gas in June, the most recent month with EIA data, up more than 10% year-on-year.

“It’s a real challenge for Europe this winter,” said Jim Hamilton, an economics professor at the University of California, San Diego, who specializes in energy markets. “It’s potentially a pretty big deal for them to go without gas in Russia. Liquefied natural gas is a potential [answer] plus – you can ship that across the ocean.

“But I think we definitely want to try to accelerate here given the potential real crunch risk that Europe faces,” Hamilton said.

European Union

European Commission President Ursula von der Leyen and European Commissioner for the European Green Deal Frans Timmermans address a media conference in Brussels on July 20, 2022. (AP Photo/Virginia Mayo/AP Newsroom)

However, increased gas exports leaving the US for European buyers have weighed more on domestic supplies.

On Tuesday, natural gas traded at $7.71 per million British Thermal Units (MMBtu), while January 2023 futures prices hit $8.04 per MMBtu, according to market data. By comparison, the average natural gas price between 2010 and 2021 was $3.26 per MMBtu, Federal Reserve data showed.

Natural gas inventories have been depleted in recent months, falling 7.4% year-on-year and 11.3% compared to their 2017-2021 average, according to the EIA.

BIDEN ADMIN AGREES WITH ECO GROUPS TO BLOCK MASSIVE OIL WELL RENTAL

“You’re going to get price increases,” David Kreutzer, senior economist at the Institute for Energy Research, told FOX Business. “Natural gas is really scarce in the world because of the problem in Russia and the fact that Europe has decided not to develop its own gas resources. So they will look to us.”

Texas power

A power plant is shown on June 15, 2021 in Texas. (Brandon Bell/Getty Images/Getty Images)

Kreutzer and Zycher echoed Angstgott-Roth in arguing that the U.S. will also face significant grid and energy problems in future winters due to the increased push toward green energy.

They cited Biden administration policies such as Interior Department lease restrictions, a proposal for a climate disclosure rule by the Securities and Exchange Commission, and a proposal by the Federal Energy Regulatory Commission that would make fossil fuel infrastructure projects more difficult to approve.

“There’s this massive political bias towards wind and solar that, despite the subsidies, is massively expensive and unreliable — so electricity prices are skyrocketing in some states because unconventional, uncompetitive electricity is being used in place of conventional competitive energy. ‘ Zycher said.

CALIFORNIA’S GRID RELIES HEAVYLY ON NATURAL GAS TO SURVIVE ENERGY CRISIS DESPITE GREEN PUSH

President Biden speaks at the climate summit in Scotland

President Biden speaks during the COP26 climate summit November 2, 2021 in Glasgow, Scotland. (AP Photo/Evan Vucci, Pool, File/AP Newsroom)

“The political assault – political, regulatory, ideological – on fossil fuels has, unsurprisingly, reduced investment and thus expected future production, and pushed up expected future prices,” he continued. “And with it current prices.”

GET FOX BUSINESS ON THE GO BY CLICKING HERE

He specifically pointed to California, where the state’s power grid operator recently warned of widespread blackouts due to increased demand. California and several other states have in recent years attempted to replace existing fossil-fuel power generation capacity with renewable sources such as solar and wind.

“The concern … is that there are places like California, where they’ve expanded renewable energy and their reliance on them, and Texas, where very cold temperatures and little wind result in blackouts or blackouts that are much worse than price increases “Kreutzer said.

Leave a Comment