At a Glance
- A major winter storm is expected to hit large parts of the country this weekend, driving up demand for heating.
- Natural gas prices have already jumped 63% since Monday, the steepest rise since December.
- The surge in demand and supply constraints could push utility bills higher for months.
Why it matters: Consumers will see immediate spikes in their bills and longer-term increases that could take up to a year to materialize.
Energy bills are poised to climb sharply in the coming weeks as a winter storm gathers strength across the country. The National Weather Service warns of widespread heavy snow, sleet, and freezing rain starting Friday and continuing through the weekend. With people cranking up heating systems all at once, demand will surge, leading to higher prices for both natural gas and electricity.
Storm Forecast and Immediate Demand Surge
The National Weather Service said the storm will affect a large portion of the country, bringing heavy snow, sleet, and freezing rain. “Everybody is racing to their thermostat to crank up the heat all at once – there’s just a tremendous demand pull that happens,” said Eli Rubin, a senior energy analyst at EBW AnalyticsGroup.
Rubin explained that electric heating will likely see a larger surge because electric heaters are not as efficient as gas heaters. He added that electric heaters are typically designed for regions that do not experience prolonged cold, so when severe cold spikes hit those areas, demand can skyrocket.
Long-Term Price Impacts
Natural gas prices have been soaring in the days leading up to the forecast winter storm, rising 63% since Monday, the most since December. However, residential households won’t feel the price hikes immediately. Instead, the increases will gradually trickle down into their energy bills.
“What happens with these huge price increases is that they’re absorbed slowly,” Rubin said. “State regulatory commissions and your local utilities are not going to suddenly double the rate you’re paying for natural gas overnight – but you will be paying. They’re going to phase it in over time.”
Consumers who heat their homes with electricity will see a similar impact on their long-term bills. Rubin added that the longer-term price increases for both heating sources could take six months to a year, or even longer, to show up in utility bills.
Supply Constraints and Freeze-Offs
Freezing temperatures can cause equipment used in natural gas production and transportation to fail, leading to power outages referred to as “freeze-offs,” according to the U.S. Energy Information Administration (EIA). Henry Hofmann, a co-portfolio manager of the Catalyst Energy Infrastructure Fund, wrote in an email to News Of Los Angeles that “inventories are ok currently, but the combination of freeze-offs and increased heating demand should cause a significant draw in the weeks ahead.”
Hofmann also noted that some gas may be diverted from liquefied natural gas (LNG) facilities in the short term to help balance the market.
EIA projected in its Short-Term Energy Outlook released January 13 that natural gas costs will go down this year but rise in 2027 because “growth in demand-led by expanding liquefied natural gas exports and more natural gas consumption in the electric power sector-will outpace production growth.”
What Consumers Can Expect
- Short-term spikes in natural gas and electricity prices due to increased usage.
- Long-term gradual increases as rates are phased in by regulators and utilities.
- Potential six-month to year-long lag before higher costs fully appear on bills.
- Higher demand for electric heaters in regions not accustomed to prolonged cold.
- Supply disruptions from freeze-offs could tighten the market further.
Expert Insights
- Eli Rubin (EBW AnalyticsGroup): “So we have some of these supply-side impacts that reduce supply at the same time we have demand surging. That creates a tremendous bullish impact on price.”
- Henry Hofmann (Catalyst Energy Infrastructure Fund): “Inventories are ok currently, but the combination of freeze-offs and increased heating demand should cause a significant draw in the weeks ahead.”
Key Takeaways
| Date | Event | Impact on Bills |
|---|---|---|
| Monday | Natural gas price rise | 63% increase in market prices |
| Friday-Weekend | Winter storm hits | Surge in heating demand, immediate price spikes |
| 6 months-1 year | Rate adjustments | Gradual rise in residential bills |
Consumers should monitor their utility bills closely over the next year, as the storm’s effects and supply constraints may push prices higher. Keeping an eye on regulatory announcements and local utility updates will help households prepare for the inevitable rise in heating costs.
Key Takeaways:
- A major winter storm will drive up heating demand and push natural gas and electricity prices higher.
- Prices are already up 63% and will likely continue to climb as supply constraints tighten.
- Residential bills will see gradual increases over the next six months to a year.
- Consumers should stay informed about rate changes and potential supply disruptions.
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