Natural gas prices highest since 2014, could cause higher energy bills

Published: Oct. 13, 2021 at 8:57 PM CDT|Updated: Oct. 13, 2021 at 9:02 PM CDT
Email This Link
Share on Pinterest
Share on LinkedIn

AMARILLO, Texas (KFDA) - Natural gas prices are now higher than they have ever been in over seven years.

One economist says Texas produces 25 to 30 percent of the nation’s gas and specifically the Texas Panhandle produces a lot of natural gas.

He says there are some positive benefits of higher prices for the economy.

“We employ more people, we sell natural gas at higher price and all that filters throughout the economy, put more people to work and, so we probably exist in a region where the positive outweighs the negative,” said Karr Ingham, petroleum economist, Texas Alliance of Energy Producers.

Although, from a consumer standpoint he says there are some negatives such as, having to pay more.

He says people in Amarillo mostly get their home hearing from natural gas and electric power is also being generated through burning natural gas, so when natural gas prices are higher consumers will have to play higher prices for electricity or to heat up their homes in the Winter.

Xcel Energy says customers may see higher bills, however they use a fuel cost factor on monthly bills to account for the costs of natural gas, but says those costs were probably under collected.

“When they hear huge percentages, you know, gas has gone up 90 percent or something, that doesn’t mean your electric bill is going to go up that much, as I said fuel is only a small portion probably 10 to 15 percent of your bill and of that portion gas is a certain portion,” said Wes Reeves, spokesman, Xcel Energy.

The reason behind these higher prices stems mostly from COVID-19.

“Last year a lot of production capacity for both crude oil and natural gas was just sidelined, so during the crunch time of the pandemic in 2020, the demand for energy products just plummeted, I mean just crashed and so for two to three months period of time there were there was just there was much smaller demand for petroleum energy products,” said Ingham.

He says we are starting to make progress, however it is a slow process and says the current policies of the federal government seem to make it even slower.

Certain proposals are out there that he says are “punitive” in the nature to crude oil and natural gas producers such as, making it more expensive to produce energy products or favoring renewable energy over natural gas.

“So, what this is doing is creating something of an artificial shortage of natural gas relative to rising demand, we clearly have demand for natural gas on the way up and the market senses a shortage of supply to meet that demand, well that’s just a recipe for higher prices right there, so it’s the combination of these two things I believe that is pushing natural gas prices higher,” said Ingham.

He believes one of those things is correctable.

“Incentive-vise natural gas producers to produce more because they get paid more for it and bring it to market and that’s almost always what happens, I mean this is a situation that would correct itself absent these governmental interventions that’s not immediately correctable and we’re going to have to come to our senses about this or our consumers are going to start paying quite a lot more for energy and we may even be faced with kind of energy shortages,” said Ingham.

He says we may reach a point to where we do not have enough power to go around due to the fact we are not producing enough to meet the demand.

Atmos Energy says it is important for customers to know how they are using their energy.

“A customer’s actual usage really has a direct impact on a customers natural gas bill which is why we stress the importance of using their energy very wisely,” said Michael Gonzales, public affairs manager, Atmos Energy.

He says it helps to lower your thermostat to 68 and conserve on your hot water usage.

Copyright 2021 KFDA. All rights reserved.