Utility prices in the Northeast are rapidly rising

When we’re reliant on goods or services from around the world, a disruption hundreds of miles from home can be felt directly in whichever pocket you keep your wallet in. Recently, the supply chain disruption¹ has been all over the news, and you’ve likely seen it reflected in prices as well. You probably notice them every time you drive past a gas station. What you may have missed though, is similar issues have caused the price of natural gas to spike as well, resulting in higher utility rates and higher energy bills this winter.

What’s causing utility prices to rise

While it varies by location and utility, people across the Northeast will soon experience higher costs to heat their homes—right as winter is hitting. Some in New Hampshire will experience their rates being nearly doubled.

Others in Connecticut and Massachusetts could experience price spikes of 22% and 14%, respectively. So what’s going on here?

Turns out, a number of things residents in the Northeast may have heard of, but didn’t think they’d be affected by. Remember the freeze last February that left millions of Texans without power? That did a number on their natural gas supply as well, as both output in the state diminished and demand rose. The result was the largest monthly decline of natural gas production on record in the U.S.² 

Directly to the south and east of Texas, another natural disaster struck: Hurricane Ida. Most headlines focused on the damage done to Louisiana inland, causing massive electrical grid failures across the state. But it wasn’t any better offshore, with 94% of oil and natural gas production being forced to a halt as a result of the storm.³

Simultaneously, events across the globe were affecting the supply of natural gas. (Remember the globalization discussion above?). Europe had far less wind than typical, meaning far less energy was produced by wind turbines.⁴ It was also the driest summer in 70 years,⁵ meaning less hydropower was produced. As a result, people across the continent relied on natural gas for their energy needs more than expected.

To top things off, Russia has limited the amount of natural gas it’s producing and sending to Europe.⁶ Add all of these things up, and it becomes a simple economics issue. There’s higher demand, but lower supply. Thus, the prices everywhere are going up, even if the Northeast didn’t directly go through any of those scenarios.