As Temps Drop, Gas Prices Rise, Along With Demand For Fuel
Cold weather this week has boosted demand for heating fuels across the country. Natural gas prices are up, especially in the Northeast. At one point prices for natural gas into New York City jumped nearly ten-fold from an average winter price of $5.68 per million BTU to $55.49, according to Bentek Energy, an analytics company.
Part of the problem is getting the gas from where it's produced — these days, in places like Western Pennsylvania — to the population centers where it's burned. Sometimes there just aren't enough pipelines to meet the demand. In those cases utilities and other users start bidding up prices. Regulated utilities are willing to pay a lot to keep the gas flowing.
"You can't let Grandma freeze," says Anne Swedberg, a senior energy analyst for Bentek, repeating a phrase heard in the industry. "They [utilities] are required to continue to purchase gas to maintain their systems at whatever price, so that they can keep the lights on for Grandma and the heat on for Grandma," Swedberg says.
Analysts are still sorting out what happened when prices reached their peak. But Swedberg says in addition to pipeline constraints it appears a cold-weather phenomenon called "freeze-off" was a problem.
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