Saudi Press

Saudi Arabia and the world
Monday, Jun 02, 2025

US natural gas prices spike to 14-year high. Here's why

US natural gas prices spike to 14-year high. Here's why

US natural gas prices have skyrocketed to levels unseen since 2008, a spike that threatens to offset the benefits of falling prices at the gas pump.

Natural gas futures surged 7% on Tuesday to close at $9.33 per million British thermal unit (BTU), the highest closing price since August 1, 2008.

Although natural gas futures cooled off a touch on Wednesday, they remain up about 70% just since the end of June. And natural gas is up a staggering 525% since closing at $1.48 in June 2020 when Covid-19 had shut much of the US economy down.

The summer spike is being driven in part by high demand as scorching temperatures through much of the country force Americans to crank up the air conditioning. That in turn has chipped away at relatively low inventory levels.

"We've had this perma-heat wave cooking the United States," said Robert Yawger, vice president of energy futures at Mizuho Securities.

As temperatures drop this fall and winter, the natural gas spike signals sticker shock for families. Not only is natural gas a leading fuel source for the electric grid, it's the most popular way to heat homes in America.

"Depending on the weather, it could be a challenging winter," said Rob Thummel, senior portfolio manager at Tortoise Capital Advisors. "But not as challenging as in Europe. They are at risk of running out of natural gas. We aren't."

Europe's natural gas prices are seven times higher


Europe's natural gas crisis is being driven by its reliance on energy from Russia, which has slashed natural gas flows to Europe in response to Western sanctions.

The European Union has been forced to lay plans to ration natural gas, a drastic step that will hurt families and businesses. Natural gas prices have skyrocketed so high in Europe that it threatens to send the continent's economy into recession.

For context, Europe's natural gas prices are trading at levels equivalent to about $70 per million BTUs, according to Andy Lipow, president of Lipow Oil Associates. That is roughly seven times higher than prices in the United States.

But that is little consolation to Americans grappling with high prices at the grocery store, clothing stores and at restaurants.

Even as natural gas prices surge, oil prices have tumbled, helping to drive gasoline prices sharply lower. The national average for regular gasoline has dropped 64 days in a row, according to AAA.

Exports pick-up to Europe


Analysts say Europe's natural gas crisis is contributing to the higher natural gas prices in America, although it's not the main driver.

"Higher global prices are trickling down to the US. Natural gas has become a global commodity with the emergency of LNG," said Thummel.

The United States has stepped up its exports of liquefied natural gas (LNG) to Europe in an effort to mitigate the impact of the loss of Russian gas.

"Every spare molecule we can find, we are shipping to the eurozone," said Yawger.

US natural gas production is lagging behind


But the bigger issue for US natural gas is the fact that inventory levels are below historical averages, leaving the market with less of a buffer and driving up prices.

"We entered this year at beaten-down levels and we never caught up," Yawger said.

Supply has failed to keep up with strong demand for gas. Thummel pointed to how US oil and gas producers are under pressure from Wall Street to spend less on expensive drilling projects and more on dividends and buybacks to shareholders.

"We need more US natural gas production. The production levels are too low," Thummel said.

The good news is that higher prices should, eventually, incentivize more production. And investors are not betting today's high prices will continue. The futures market indicates natural gas prices should be almost 50% lower at this point next year.

Then again, very few people thought a year ago natural gas prices would be at 2008 levels. And yet here we are.

Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
Paris Saint-Germain's Greatest Triumph Is Football’s Lowest Point
OPEC+ Agrees to Increase Oil Output for Third Consecutive Month
Turkey Detains Istanbul Officials Amid Anti-Corruption Crackdown
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
European and Arab Ministers Convene in Madrid to Address Gaza Conflict
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
Iranian Revolutionary Guard Founder Warns Against Trusting Regime in Nuclear Talks
UAE Offers Free ChatGPT Plus Subscriptions to Citizens
Lebanon Initiates Plan to Disarm Palestinian Factions
Iran and U.S. Make Limited Progress in Nuclear Talks
The Daily Debate: The Fall of the Dollar — Strategic Reset or Economic Self-Destruction?
Trump Administration's Tariff Policies and Dollar Strategy Spark Global Economic Debate
OpenAI Acquires Jony Ive’s Startup for $6.5 Billion to Build a Revolutionary “Third Core Device”
Turkey Weighs Citizens in Public as Erdoğan Launches National Slimming Campaign
Saudi-Spanish Business Forum Commences in Riyadh
Saudi Arabia and Spain Sign MoU to Boost SME Sectors
UK Suspends Trade Talks with Israel Amid Gaza Offensive
Iran and U.S. Set for Fifth Round of Nuclear Talks Amid Rising Tensions
Russia Expands Military Presence Near Finland Amid Rising Tensions
Indian Scholar Arrested in Crackdown Over Pakistan Conflict Commentary
Israel Eases Gaza Blockade Amid Internal Dispute Over Military Strategy
President Biden’s announcement of advanced prostate cancer sparked public sympathy—but behind closed doors, Democrats are in panic
A Chinese company made solar tiles that look way nicer than regular panels!
Indian jet shootdown: the all-robot legion behind China’s PL-15E missiles
The Chinese Dragon: The True Winner in the India-Pakistan Clash
Australia's Venomous Creatures Contribute to Life-Saving Antivenom Programme
The Spanish Were Right: Long Working Hours Harm Brain Function
Did Former FBI Director Call for Violence Against Trump? Instagram Post Sparks Uproar
US and UAE Partner to Develop Massive AI Data Center Complex
Apple's $95 Million Siri Settlement: Eligible Users Have Until July 2 to File Claims
US and UAE Reach Preliminary Agreement on Nvidia AI Chip Imports
President Trump and Elon Musk Welcomed by Emir of Qatar Sheikh Tamim with Cybertruck Convoy
Strong Warning Issued: Do Not Use General Chatbots for Medical, Legal, or Educational Guidance
Saudi Arabia Emerges as Global Tech Magnet with U.S. Backing and Trump’s Visit
This was President's departure from Saudi Arabia. The Crown Prince personally escorted him back to the airport.
NVIDIA and Saudi Arabia Launch Strategic Partnership to Establish AI Centers
Trump Meets Syrian President Ahmad al-Shara in Historic Encounter
Trump takes a blow torch to the neocons and interventionists while speaking to the Saudis
US and Saudi Arabia Sign Landmark Agreements Across Multiple Sectors
Why Saudi Arabia Rolled Out a Purple Carpet for Donald Trump Instead of Red
Elon Musk Joins Trump Meeting in Saudi Arabia
Trump says it would be 'stupid' not to accept gift of Qatari plane
Quantum Computing Threatens Bitcoin Security
×