Why are natural gas bills expected to be 30% higher this winter?

MINNEAPOLIS (FOX 9) - The U.S. Energy Information Administration predicts people who heat their homes with natural gas will pay 30 percent more on their energy costs this winter compared to this winter. A University of Minnesota energy economy expert breaks down why. 

The report published a short-term energy outlook earlier this month outlining their predictions for rising global energy costs this winter. The report predicts that nearly half of American households use natural gas, and those customers could see costs rise as much as 50 percent this winter if it’s 10 percent colder than average. 

The report also estimates households using propane to heat their homes will spend about 54 percent more on costs this year and as much as 94 percent more if this winter is 10 percent colder than average. 

Alfred Marcus, a professor that studies energy and the economy at the University of Minnesota says across the globe natural gas is more expensive this year. 

"The prices now are globally about as high as they’ve ever been," Marcus said. "There was kind of a perfect storm of events that occurred globally." 

Marcus says one reason natural gas prices are so high is because demand is so high. This summer was hotter than normal in many places, including Europe, where natural gas is used for electricity. 

"We had a very hot summer, particularly in Europe, and that put great pressure on natural gas prices globally," Marcus said. 

At the same time, he says manufacturers primarily in Asia started ramping up production again after putting some of it on pause during the pandemic. 

"When COVID began to ease production started back up again in Asia so there was increased demand in Asia for natural gas," Marcus said. 

He says geopolitical conflicts between Russia, Ukraine and Europe could be another reason prices are so high. While he says the United States can produce its own natural gas, demand overseas means producers are sending some of their supply to foreign markets to make more profit and United States shale producers are hesitant to flood the market and reduce prices. 

He says because natural gas is so versatile and used as an energy source in so many different ways, the high cost and high demand could impact everything from produce prices to the price of goods coming from overseas. 

Minnesotans could also see higher costs on their natural gas bills after a storm earlier this year made natural gas prices skyrocket. This fall, major utility suppliers like Xcel started incrementally charging customers for that cost. 

There is help for Minnesotans trying to cover the costs of their energy bills this winter. The state’s Energy Assistance Program is open for applications. The program received an additional $106 million in federal funding to help families cover the rapidly rising costs of energy. 

Around 600,000 Minnesota households, or about one in every four, qualify for some assistance. For this 2021-22 winter season, the Minnesota Department of Commerce raised the income eligibility limit to 60% of Minnesota’s median income levels. That means a household of four making less than 68-thousand dollars annually qualifies. 

So far, the state says they’ve helped more than 25,000 households pay for energy costs in the first 30 days of services.

For more information on how to apply and where to find your county’s energy assistance information click here.