U.S. Energy Prices Are Breaking a Historic Pattern. The Results Could Be Severe

Nov 3, 2021

U.S. Energy Prices Are Breaking a Historic Pattern

As Europe struggles through an energy crisis, the United States could very well be on the precipice of our own. Prices are high—that is no secret. Production of oil is lower than it was before Covid, and there are concerns about a cold winter coming. And yet the situation may be worse than that. The U.S. may very well be facing a shocking dislocation of the energy economy.

Electricity prices in the U.S. follow a typical pattern. Prices increase in the summer and decline the following winter. According to data from the Bureau of Labor Statistics, over the last 20 years, prices in summer months (May–October) have averaged $0.007 per kilowatt-hour more in the summer than in the preceding winter months. Prices drop, on average, by $0.004 per KWH in the winter months (November–April) compared to the preceding summer months. Between 2001 and 2020, electricity prices only diverged from this pattern once, with a brief spike in the winter of 2006.

We are now witnessing a radically different approach to electricity pricing. Electricity prices rose $0.001 per KWH in the winter of 2020–2021, compared to the previous summer. Worse, the price is anticipated to continue to climb throughout the winter. If that happens, last winter will be remembered as a dislocation rather than an anomaly. The ramifications would be severe for energy and utility investments, as well as for Americans struggling to pay their electricity and heating bills this winter.

Prices Rise in Summer, Drop in Winter...Until 2020

Energy prices have been rising in the summer and falling in the winter over the last 20 years. Prices, on the other hand, have defied the trend since 2020, raising concerns about energy expenses this winter.

There are three reasons for this change in electricity pricing. To begin with, in order to reduce greenhouse-gas emissions, the United States has increasingly relied on natural gas for power generation over the previous 15 years. Second, just a few years ago, domestic natural-gas production in the United States outstripped demand, and we are now generating more marketed natural gas than we were before Covid. Despite this, the increase in production has not kept pace with the increase in demand. Finally, the price of natural gas in the United States has increased by more than 100 percent since the beginning of the calendar year, owing to speculation and inflation.

The United States became much more reliant on natural gas for power generation between 2005 and 2020. Natural gas produced 782,829 gigawatt-hours of power in the United States in 2005. We generated 113 percent more electricity from natural gas by 2020, while coal generation declined by 1,302,087 GWh. During that time, coal's share of total electricity generation in the United States fell from 26% to 10%. Meanwhile, natural gas surged from 9% to 19% of total power output, while total power generation increased by little under 3%. Greener energy could have picked up the slack left by coal, but that didn't happen. Nuclear and hydroelectric hardly increased, while solar and geothermal electricity remained insignificant. Only wind power increased significantly, from 17,881 GWh to 341,416 GWh.

To put it another way, our environmental policies have increased our reliance on natural gas. Natural gas contributed for 40% of the electricity generation in the New York region on Oct. 29 this year. In California, natural gas accounted for more than 60% of total energy consumption, and in New England, it accounted for more than 70%. Natural gas is also used in the United States for heating, cooking, and as a feedstock for petrochemical products. Natural-gas storage in the United States is now 10.2 percent lower than it was a year ago.

Natural gas has surpassed oil as the most important natural resource in the United States, and there is no candidate to replace it at this time. Regardless of how cold it gets, millions of Americans will face increased electricity and heating expenditures this winter if this pattern continues.

This isn't the first time America has confronted a situation like this. In 1902, anthracite coal, which was predominantly mined by railroads in Pennsylvania, was used to heat most homes and structures in the United States. Miners went on strike in the spring of that year, and they stayed on strike all summer. “A coal famine in the winter is an ugly thing, and I fear we may see tremendous suffering and great disaster,” President Theodore Roosevelt stated as winter neared. He vowed to nationalize the coal mines to avoid a heating catastrophe, then calmly organized a commission that reached an agreement to terminate the strike in October. That winter, Americans did not freeze.

We'll undoubtedly have enough natural gas to heat and power our homes this winter, but will Americans be able to afford it?

Subscribe Our Newsletter

A New B2BinPay Update With TRX Staking and Better Operations

Hazem

B2BinPay Releases a New Update – Expanding Blockchain Support and Introducing TRX Staking

B2BinPay launched a new product update, B2BinPay V20, adding more supported blockchains (Optimism, Arbitrum and Base) and introducing a new TRX staking feature.

Crypto
Binance announcement about stablecoins

Nato

Binance Announcement: Unregulated Stablecoins Face Restrictions in the EU 

Get the latest update on Binance Announcement regarding limitations on unregulated stablecoins for European users in compliance with upcoming EU regulations.

Crypto
Get the ultimate solution: B2BinPay Get the ultimate solution: B2BinPay
Sponsored
Liquidity Provider

How Do The Liquidity Providers Work?
Let's find out what is the role of the Liquidity Provider, how brokers provide liquidity and how Liquidity Providers earn money.

discover
A Guide to Mastering BscScan

Levan

Why You Should Adopt BSscan in Your Crypto Operations

Binance developed BscScan to simplify navigating their BSC ecosystem. Here’s what you can do with this comprehensive blockchain explorer.

Crypto Exchange Business
Contact us bg

Contact Us

Contact the Liquidity Provider
for any questions and advertising inquiries

    Please fill out this contact form to get in touch with us

    / 3000

    By clicking “Get in touch” button, you agree to the privacy policy

    Successful!
    Thank you for your request.
    We will contact you shortly.
    Close

    Hazem

    Best Platforms to Trade Perpetual Futures in 2025

    Best platforms to trade perpetual futures in 2025

    Alex

    Top 10 Fintech Website Development Agencies for 2025

    Best Fintech Website Development Agencies for 2025

    Сonstantine

    Internal vs External Range Liquidity In ICT Trading Explained

    Internal vs External Range Liquidity In ICT Trading

    Constantine

    Portfolio Backtesting — Tools, Metrics, and Methods Explained

    Portfolio Backtesting

    Сonstantine

    ICT Trading Explained: Smart Money Concepts, Tools and Setups

    ICT Trading Explained

    Сonstantine

    CFD Trading Strategies: A Practical Guide to Risk and Execution

    CFD Trading Strategies

    Alexander

    What is a Fair Value Gap? A Guide to Trading Market Imbalances

    What is Fair Value Gap

    Vitaliy

    Triangle Patterns in Trading: Mastering Ascending, Descending & Symmetrical Strategies for Maximum Profit

    Triangle Patterns in Trading: Ascending, Descending & Symmetrical Guide

    Alexander

    What Is COTI? Payments, Token & Price Prediction

    What is a COTI coin

    Constantine

    Best Copy Trading Software in 2025

    Best Copy Trading Software in 2025

    Alex

    What Is an AI Agent? The Future of Finance Explained

    AI Agent Explained

    Constantine

    How to Start a Liquidity Provider Business?

    How to Start a Liquidity Provider Business

    Constantine

    How to Start a White Label Brokerage?

    How to start a white label brokerage

    Constantine

    How to Start a Multi-Asset Brokerage?

    How to Start a Multi-Asset Brokerage

    Hazem

    Crypto Ransomware – How They Happen and How to Avoid Them

    Crypto ransomware explained

    Constantine

    Best Web3 Browsers in 2025

    Best Web3 Browsers

    Constantine

    Best DAO Projects in 2025

    Best DAO projects in 2025

    Alexander

    Crypto Nodes That Pay: Your 2025 Guide to Top Passive Income Opportunities in Crypto

    crypto nodes that pay

    Alex

    Pi Network: Scam or Groundbreaking Crypto? The Full Analysis

    Pi Network Explained

    Constantine

    Triple Net Lease: Meaning, Benefits, and Strategies Explained

    Triple Net Lease

    Constantine

    Hanging Man Pattern: How to Identify and Trade It Effectively

    Hanging Man Pattern

    Alex

    5 Infinite Banking Mistakes That Could Cost You Thousands

    Infinite Banking Mistakes to Avoid

    Aleksander

    Solana Firedancer: Solving Solana’s Biggest Problems with a New Engine

    Solana Firedancer explained

    Alexander

    What Is an Interest Coverage Ratio? How to Use This Financial Metric to Evaluate Company Health

    Interest Coverage Ratio Explained
    liquidity-provider-logo
    • News
      • Stock Market Forecast
      • Stocks
      • Banks and Finance
      • Companies
      • Crypto
      • Forex
      • AI
      • Technology
      • DeFi
      • NFT
    • Articles
      • Crypto Payments
      • Trading
      • Crypto Exchange Business
      • Forex Business
      • Fintech
      • Liquidity
      • FinTech Awards
      • Blockchain
      • Investing
      • NFT
      • DeFi
    • More
      • Videos
      • Liquidity Providers List
      • Crypto Payment Providers
      • White Label Brokerage Platforms
      • Broker CRM Platforms
    [email protected]

    © 2024 Liquidity Provider. All Rights Reserved

    Privacy Policy Cookie Policy
    This site is registered on wpml.org as a development site. Switch to a production site key to remove this banner.