Is the current high price of natural gas related to the California energy crisis?
The current run-up in natural gas prices is a national phenomenon. The fundamental cause for the high prices is increasing demand for natural gas to heat homes, fill storage facilities, power industry and generate electricity. Development of new supplies of natural gas has not kept pace with demand. This creates the current tight market that drives up prices generally and makes the market susceptible to price spikes when demand rises during periods of extreme weather anywhere in the United States. The wholesale price of natural gas (around $5 per thousand cubic feet this summer) was nearly twice as high as it was last summer (around $3). The rising natural gas costs seen this summer have partially receded. Demand for natural gas has lessened because of moderate weather and industrial cutbacks, while production of natural gas has gone up slightly. The availability of this gas has allowed utilities in recent weeks to inject record amounts of natural gas into storage for use this winter.
