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News & Views

Provided by the Investment Professionals of Frost Investment Advisors | October 04 , 2021

Shift in Energy Production Pushing Natural Gas Prices Up

Natural gas prices today are 150% above where they were a year ago and moving higher. Demand for energy is increasing at a much faster pace than the supply side can meet, likely causing higher prices until supply and demand can come back to equilibrium.
 
That could take some time for a variety of reasons, not the least of which is the global drive toward green energy. As coal plants are shuttered, there will be an increased reliance on natural gas to fill the void while additional solar and wind farms are being built. However, green energy isn’t foolproof and can fail when frozen or when the wind stops blowing, as seen in Europe this month. 

This series of events has recently created an energy crunch at home and abroad, with countries competing for limited supplies. As a result, natural gas prices are increasing around the globe, particularly in Europe and Asia. 

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