An industrial manometer showing gas distribution pressure in a pipeline
Americans will be using less natural gas and paying far less for it this year, according to U.S. government projections released Tuesday.
Mild late-winter weather will cut natural gas consumption and drive prices down, the U.S. Energy Information Administration predicts in the agency’s short-term energy outlook.
More: Read the Energy Information Administration’s full report.
Data from the National Oceanic and Atmospheric Administration suggest that the first two months of this year were close to the warmest on record nationwide “in data going back to 1895,” particularly in the eastern United States.
As a result, U.S. natural gas consumption is expected to average 99.1 billion cubic feet per day in the first quarter of the year, down 5% from a year ago. The decline in demand is in both residential and commercial use, projected at 11% less than in the first quarter of 2022.
That lack of demand is also affecting the amount of natural gas in storage, and of course prices. The agency expects the country to end the winter months with 25% more natural gas than it had in storage at the same point last year, and 23% more than the five-year U.S. average. “The Henry Hub natural gas spot price in our forecast averages about $3 per million British thermal units in 2023,” the outlook said, “down by more than 50% from last year.”
The EIA had expected almost $5 per million BTUs in its last short-term outlook, issued in early January.
Wholesale electricity prices are also expected to fall this year, because natural gas is the most-used fuel in generating electric power in this country. The EIA also cited increased generation from renewable sources like wind and solar farms as a factor in reduced prices.
On the other hand, consumption of liquid fuels like gasoline and diesel are expected to rise by some 1.5 million barrels per day this year, and by an additional 1.8 billion barrels per day in 2024. A reduction in available petroleum from Russia, the subject of boycotts over its invasion of Ukraine, was expected to limit global oil production figures, but recent Russian exports “have outpaced expectations,” the report said, and overall expectations of liquid fuels “will average 101.5 million barrels per day in 2023, up 1.6 million barrels per day from 2022.”
American gasoline consumption projections have also gone up for 2023 and 2024 by 2% compared with January’s outlook. “Data revisions from the Federal Highway Administration resulted in a lower estimate of 2022 vehicle miles traveled,” the outlook said. “For the same period, we also reduced our estimate of vehicle fuel efficiency.” Those two factors played into the EIA’s increase in projected domestic gasoline consumption.
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