Home Heating Costs could Rise to $1,000 per Month this Winter

(KNSI) – Inflation paused in July and oil prices continue to decline, but a new shock threatens to hit consumers in the pocketbook soon. Natural gas futures closed Tuesday at fresh 14-year highs on the New York Mercantile Exchange, above $9.32 for the near-month contract.

That is about double the average price of last winter. It is over four times as much as the cost in early 2020. Natural gas is used to produce electricity. In the winter, it is the primary source of heat in Minnesota.

The surge is being driven by Europe as it tries to wean itself off of Russian natural gas and replace it with other sources. Germany now imports more of the fuel from Norway and liquified natural gas will increasingly come from the United States and northern Africa. European utilities are experimenting with using a unique oil blend to produce electricity, are working to bring nuclear capacity back online, plus they’re turning to coal and firewood along with solar and wind energy.

Plenty of consternation continues. Electricity futures for Germany and France have surged to at least 500 Euros per megawatt-hour, about six times as expensive as a year ago. The price shock continues even as factories shut down because power costs have made them economically unviable.

It promises to keep a floor under natural gas prices here domestically into the coldest months of the year as demand soars. Home heating costs could run as high as $1,000 per month for larger residences unless markets stabilize. Minnesotans who were walloped by food and gasoline inflation so far this year are facing the potential of another outsized bill for a necessity. It will mean thermostats are set higher than they otherwise would be and potentially unprecedented applications for financial assistance.

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