U.S. natural gas prices surged above $6 per million BTU (British thermal units) for the first time since 2022, showing a drastic increase in supply-demand imbalance triggered by extreme winter conditions. The spike illustrates the high price elasticity of demand in the short run, as heating needs increase rapidly during severe cold, while production and transportation remain relatively the same in the cold temperatures and winter weather. With natural gas inventories being used more and drawn down faster than expected, they quickly repriced to account for an unexpected potential shortage.
The price surge also highlights a broader structural pressure in the U.S. energy market. Increasing liquefied natural gas exports have further linked domestic prices to global demand, reducing excess supply during peak consumption. At the same time, power grid constraints and regional travel bottlenecks increase economic costs due to extreme weather. With these factors, it shows that weather-driven price shocks may become more frequent, reinforcing the role of natural gas.
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