EIA expects higher natural gas prices as production reductions remain following Hurricane Ida
The U.S. Energy Information Administration expects that natural gas prices will remain higher in the coming months following Hurricane Ida. In its September Short-Term Energy Outlook (STEO), EIA forecast fourth-quarter Henry Hub spot prices to average $4.00 per million British thermal units (MMBtu), a 16% increase from its August forecast.
EIA also revised its 2022 forecast of the average U.S. natural gas price to $3.47/MMBtu, a 13% increase over its 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.”
Hurricane Ida led producers to close more than 90% of natural gas and crude oil production capacity in the Gulf of Mexico region as the storm approached. Significant production and refining capacity remains offline in the region. EIA expects that production and refining activity will gradually be brought back online through September.
U.S. natural gas prices ended August at $4.33/MMBtu, bringing the monthly average to $4.07/MMBtu, a 77% increase over August 2020.
Also in the STEO:
- Brent crude oil prices averaged $71 per barrel in August, down $4 per barrel from July, but up $26 per barrel over August 2020. EIA expects Brent crude oil to average $71 for the fourth quarter of 2021 and $66 in 2022.
- EIA forecasts small-scale solar capacity—primarily from residential rooftop solar panels—to increase by more than 11.5 gigawatts (GW) in 2021 and 2022. Small-scale solar capacity increased by 4.5 GW in 2020.
The entire Short-Term Energy Outlook is available on the EIA website.
The product described in this press release was prepared by the U.S. Energy Information Administration (EIA), the statistical and analytical agency within the U.S. Department of Energy. By law, EIA’s data, analysis, and forecasts are independent of approval by any other officer or employee of the U.S. government. The views in the product and press release therefore should not be construed as representing those of the U.S. Department of Energy or other federal agencies.
EIA Program Contact: Tim Hess, STEO@eia.gov