The Widowmaker

We take another look at power and natural gas prices

The Widowmaker
Photo by Ed van duijn / Unsplash
The historically volatile March/April natural gas futures spread coming out of winter is affectionately called the widowmaker

Home heating and power bills tied to natural gas will surely create a web of financial strains on many U.S. consumers over the next several months

EIA monthly electricity prices for May 2022 were released recently

We compare recent changes in industrial power prices (the closest available retail price to wholesale) by U.S. state and natural gas generation exposure

Natural Gas Prices Remain Robust

Summer heat in the U.S. and conflict in Europe continue to support natural gas prices, with recent prices in the $8-9/MMBtu range.

The correlation is fairly tight between 2-year percentage change in industrial power prices and the amount of power stack fueled by natural gas generation

Few states have been safe from rising industrial power prices

Impact on Power Prices

The top-10, lower-48 U.S. states with the most natural gas generation have seen industrial power prices rise 29% over the last 24-months, 3.8x the change in the lowest-10 states.

Industrial power prices are 33% higher in the states with the highest natural gas exposure compared to those with the least generation from that fuel source.

Over the last 2-years, four states have seen their industrial power prices rise over 50%.

It can seen visually that blue states - those perceived to be embracing renewables more - generally have higher power prices than red ones

But it is also visible that red states - those perceived to be supportive of fossil fuels - have generally seen power prices rising faster in recent months

The summer isn't over, things could get even hotter for U.S. power consumers 🔥