Natural gas prices, which have been low for years, are ramping up and could bear bad news to consumers and to the economy this winter.
The news could be even worse if we have a colder than normal winter.
First, the bad news: Natural gas prices are soaring and are about twice as high as they were a year ago. Utilities are warning that gas, which is the predominant energy source for home heating in central Illinois, could be 30 percent more costly this year than last year.
Customers in the Ameren Illinois territory, which includes Champaign-Urbana and Danville, already are paying twice as much for gas as they paid last September.
The good news: Prices could jump even more if the winter is colder or wilder — more hurricanes, floods and freezes in sensitive areas — than normal.
Early indications are that there’s a reasonably good chance, at least in Illinois, that winter will be warmer than normal. The National Weather Service says there’s a 30 to 40 percent chance that Illinois’ early winter months — November, December and January — will be above average. That would be helpful.
But higher natural gas prices this winter are a virtual certainty. A warm summer, disruptions to gas production because of hurricanes, a growing economy and tightening supplies worldwide have led to a wholesale price of about $5 per one million British thermal units. Last July, gas cost $1.77 per million BTUs. Prices in some parts of Europe already are at $20 per million BTUs.
And it’s likely that this winter’s higher costs could extend well into next year, a result of a healthier national economy. The U.S. Energy Information Administration reported this week that natural gas used by the industrial sector, which includes fertilizer, chemical and petroleum production, will be well above pre-pandemic levels and possibly at the highest levels in 25 years.
The downside, of course, is what higher energy costs can do to the economy, particularly in Illinois, where comparatively low energy costs are among the few business advantages the state has over its Midwestern neighbors. Any prolonged natural gas shortage and companion price increases, combined with the Legislature’s recently enacted electricity price increases, could blunt that energy advantage.
Here’s hoping for a mild winter with few climate calamities. That would be good not just for central Illinois consumers but for farmers, industrial plants and major institutions in the state.