Natural gas prices are expected to remain higher in the coming months following Hurricane Ida, according to the U.S. Energy Information Administration (EIA).
The EIA on Wednesday (Sept. 8) released its September Short-Term Energy Outlook that shows Henry Hub Spot prices will average $4 per million British thermal units in the fourth quarter, a 16% increase from EIA’s August expectations. The EIA also revised its 2022 forecast for the average U.S. natural gas price to $3.47 per million British thermal units, a 13% increase over the previous forecast.
“Hurricane Ida affected natural gas production at a time that the United States was already experiencing higher natural gas prices due to growth in exports, strong domestic natural gas consumption, and relatively flat natural gas production,” said EIA Acting Administrator Steve Nalley. “Lost production from the storm combined with these current market conditions has limited our ability to build up natural gas inventories, and we expect that will keep prices higher in the short term than we had previously thought.”
On Aug. 29, Hurricane Ida made landfall as a Category 4 storm near the Fourchon Port in Louisiana. The storm led producers to close more than 90% of natural gas and crude oil production capacity in the Gulf of Mexico. Significant production and refining capacity remains offline in the region, according to the EIA. Production and refining activity will be brought online gradually through September.
At the end of August, U.S. natural gas prices were $4.33 per million British thermal units, and the monthly average was $4.07 per million British thermal units, a 77% increase from August 2020.
Following are other highlights in the Short-Term Energy Outlook:
- International benchmark Brent crude oil prices are expected to average $71 in the fourth quarter and $66 in 2022. The EIA expects U.S. production increases will reduce prices in 2022.
- Retail gasoline prices are projected to average $3.14 per gallon in September before falling to $2.91 per gallon in the fourth quarter.
- Small-scale solar capacity, largely comprising residential rooftop solar arrays, is expected to increase by more than 11.5 gigawatts in 2021 and 2022. The capacity rose by 4.5 gigawatts in 2020.
“Many Americans began investing in home improvement projects starting in 2020, as they were spending more time at home,” Nalley said. “Installing solar panels was a major part of that, and we expect the trend to keep growing through next year.”
Meanwhile, utility-scale solar capacity is expected to rise by 15.9 gigawatts in 2021 and 16.3 gigawatts in 2022. Also, 17.6 gigawatts and 6.3 gigawatts of new wind capacity is expected to come online in 2021 and 2022, respectively.