The price of natural gas closed August 12 at $8.77 per million BTU at Henry Hub. Which is high. Not as high as where it was on the sixth of June, at $9.32. But still, really up there.
Back on the eleventh of February, natural gas was at $3.94. Less than two weeks later, on the twenty-fourth of February, when Russia invaded Ukraine, it had risen to $4.57. Three and a half weeks after that, on the eighteenth of April, it had rocketed to $7.82.
The price has been high throughout the war which has now gone on for almost half a year. It dipped a bit in early July, falling to $5.51 on the sixth of that month. But the price bounced back significantly soon after.
The high price is impacting the provision of electric and natural gas utility service of course. Last Wednesday’s Consumer Price Index shows that the American consumer paid 15.2 percent more per kilowatt-hour for electric service in July than a year ago, on average. And 30.5 percent more per hundred cubic feet for natural gas service.
For comparison’s sake, the American consumer paid 48.9 percent more per gallon of motor gasoline. And 77.9 percent more per gallon for home heating oil and distillates. This according to last Thursday’s Producer Price Index.
The PPI also shows that electric power plant owners paid 32.8 percent more for natural gas than a year ago. Which of course is really driving up the price of electric utility service. Notwithstanding utility contracting and hedging to moderate the cost of electricity.
It’s interesting to look at the prices of energy commodities across the economy. The price of natural gas economy-wide was 61.1 percent higher in July than a year ago. Coal was 60.5 percent higher. Number two diesel was 71.3 percent higher. Clearly these energy commodity prices are very much correlated.