Over the past month, natural gas prices went down because of the closing of the Freeport liquified natural gas export terminal in Texas. The closing of the terminal eliminated much of the foreign demand for natural gas but also increased the reliance of the U.S. on imports. With the explosion at the Oneok liquified natural gas facility during the first week of July, the consequences are predicted to be minimal if natural gas is rerouted to one of the nine other processing plants they own.

As of Monday, July 11^th, natural gas prices increased by 8.72 percent because of heat predictions for most areas in the U.S. These predictions resulted in increased air conditioning demand. The increased demand was met with supply issues because of the reduced amount of natural gas in storage this year (EIA, 2022). This year natural gas inventories are 12.2 percent below the seasonal average. On the week ending on July 6^th, eighteen vessels left the US carrying 71 Bcf of liquified natural gas.

Net injections into the storage totaled 60 Bcf for the week ending on July 1^st. Compared with the five-year average net injections of 60 Bcf and last year’s injections of 25Bcf during the same week, working natural gas stocks totaled 2,311 Bcf, which is 322 Bcf lower than the five-year average and 261 Bcf lower than this time last year (EIA, 2022).

Over the past twelve months, the average monthly spot prices have more than doubled, with natural gas prices increasing by $3.86 per million British thermal units because of low inventory levels coupled with high demand. The shutdown of the Freeport liquified natural gas terminal caused supply and demand to become more balanced resulting in a 40% decrease in the price of liquified natural gas from June 8^th to July 6^th.

According to the U.S. Energy Information Administration, the forecast for the summer of 2022 includes retail sales of electricity to be 0.4% higher than last summer. This growth is a result of increased electricity sales to the commercial and industrial sectors, representing continued economic recovery from the pandemic. The forecast also predicts that the U.S. residential sector sales of electricity will fall 2.0% during the summer of 2022. The usage of a typical residential customer will average 1,050 kWh per month between June and August 2022, which would be 2.9% lower than in 2021 (US Department of Energy, 2022). The forecast for lower electricity usage is a result of the idea that the summer will be milder than last year. The forecast was proven to be incorrect when a heat wave hit the states in mid-July, thus increasing demand and casing the price of natural gas to rise by 7 percent. The average gas output in the lower 48 states in the U.S. rose to 96.2 bcfd so far in July from 95.3 bcfd in June. It is expected that the US electric power sector will generate 1,150 billion kWh of energy this summer, which is about the same as last summer. The cost of natural gas delivered to power generators will average $8.81/MMbtu during the summer of 2022, an increase of 124% from last summer. The increased gas prices have a direct correlation between the inflexibility in gas-to-coal switching for power generation along with constraints on increasing natural gas production.

The continuation of the war in Ukraine has resulted in supply issues for natural gas in many countries. The war put more stress on the economy while it was recovering from the pandemic because of supply chain disruptions, weak investment in energy production, and a rapid rebound in global demand. The global rise in inflation resulted sharp increase in prices over the past year, making it harder to obtain natural gas in large quantities. In 2019 the United States stopped importing petroleum gases from Russia (Roberts, 2022). This choice means that the ban of Russian energy imports did not directly affect natural gas prices in the U.S. The decreased production of energy during the pandemic negatively affected the U.S. because prices skyrocketed when demand rapidly began to increase. When the world began to open again the supply of energy was high because of the decrease in demand during the pandemic. After some time, the natural gas in storage became depleted when people returned to work and industries opened. This caused prices to rapidly increase along with demand.