U.S. worries about winter prices as global natural gas shortage nears borders

The United States has been shielded from a global crunch because it has plenty of gas supply. However, the U.S. market is growing worried about the coming cold.

Regional natural gas markets in the United States are seeing prices for this winter surge along with global record highs — suggesting that the energy bills causing headaches in Europe and Asia will hit the world’s top gas producer before long.

Gas prices in Europe and Asia have more than tripled this year, causing manufacturers to curtail activity from Spain to Britain and sparking power crises in China.

The United States has been shielded from that global crunch because it has plenty of gas supply, most of which stays in the country since U.S. export capacity is still relatively small.

The benchmark U.S. natural gas contract has been rallying, lately hitting seven-year highs, but its $5.62 per million British thermal units (mmBtu) price is a far cry from the $30-plus being paid in Europe and Asia.

However, the U.S. market is worried about the coming cold, particularly in New England and California — where prices for gas to be delivered this winter are far above the nationwide benchmark. In New England, buyers are expecting gas to cost more than $20 per mmBtu.

High winter prices are nothing new for New England and California, where the limited number of pipelines into both regions regularly become constrained on the coldest days. But this winter could be worse.

Both regions have spent years aggressively moving away from fossil fuels through regulations, power plant retirements and carbon pricing that makes power from fossil-fired generation, particularly coal, more expensive.

U.S. gas currently being delivered to the Henry Hub terminal in Louisiana, the nation’s benchmark, recently surpassed $6 for the first time since 2014. For January that price is in the same range, suggesting buyers think the country as a whole will have ample pipeline and storage access to keep fuel flowing this winter.