Natural Gas Prices Expected to Soar After Hurricane NicholasBy Cinthya Alaniz Salazar | Tue, 09/14/2021 - 11:33
In the span of two weeks Louisiana and Texas have beared two hurricanes that have brought heavy rains, have caused infrastructure damage and the continued disruption of natural gas production—and now possibly exports. The longer production is delayed the more prices are expected to grow and with still two more months of hurricane season ahead of them; as it stands consumers should anticipate expensive electricity bills for the winter months ahead.
Last night, the National Hurricane Center (NHC) upgraded tropical storm Nicholas to a category one hurricane with registered wind speeds of 75 miles per hour and expected rainfall between 6 and 12 inches. The agency warned of possible "Life-threatening flash flooding impacts” along the upper Texas Gulf Coast into far southwestern Louisiana. Although Nicholas was downgraded back to tropical storm shortly after making landfall this morning at 12:30 pm CDT, it lashed the coast with heavy rainfall leaving some places completely underwater.
Currently, the tropical storm is moving across Texas at 8 mph, just 15 miles south-southwest of Huston and projected to make its way to Louisiana which is still recovering from Category 4 hurricane Ida which aside from bringing devastating damage, also managed to disrupt oil and gas production. Moreover, two weeks out and gulf oil and natural gas platforms are still offline or in need of repair and many companies do not know when they will be at full capacity.
Days after hurricane Ida, the US Energy Information Administration (EIA) raised Q4 Henry Hub spot gas price forecast to US$4.00/MMBtu. Then, just yesterday, in anticipation of tropical storm Nicholas NGI’s spot gas national average spiked US$0.36 cents to US$5.225/MMBtu. By this standard, natural gas prices are up 117.6 percent in the year-to-date outpacing oil and other major commodities.
While production remains at a trickle in natural gas hubs Louisiana and Texas, prices will undoubtedly continue to increase. By this account US consumers and the Mexican market which relies heavily on imports from Texas, should expect high energy bills during the winter months and maybe even into next year.