U.S. natural gas prices have dropped considerably over the past six years thanks to rapid increases in shale production. It may come as a surprise, then, that prices could spike later this year.
Here’s why: The abnormal length and severity of last winter drove gas prices 23 percent higher than the previous winter, according to Credit Suisse. The winter’s finally over, but producers now have only six months to replenish the country’s storage before heating season begins in November.
With little new production expected to come online until October, supply is going to be tight, especially if a hotter-than-average summer forces more electricity production by gas-fired power plants.
First published in 2014 in The Financialist.