Natural gas accounts for nearly 25% of residential energy needs, making it a big driver in last year’s worst bout of inflation in 40 years.
FILE-A new housing development, called Cantera at Coral Mountain goes up near Coral Mountain in La Quinta. The price of natural gas used to heat homes and generate electricity is plunging this year, thanks to a mild winter in the U.S. and Europe — bringing some relief to consumers and helping drive down inflation.
The fuel, which in the U.S. is extracted mainly from shale deposits in Texas and around Pennsylvania, accounts for nearly 25% of residential energy needs, making it a big driver in last year's worst bout of inflation in four decades. Since the start of 2023, U.S. natural gas prices have fallen 40% so far this year and Europe's prices are not far behind.
Big surpluses of gas are also helping push prices lower. U.S. inventories are forecast to end March 16% above the five-year average, according to the Energy Information Administration.The sharp drop in energy prices comes amid a broader easing of inflation as the Federal Reserve and other central banks fight high prices by raising interest rates. Inflation is at about 6.5%, well below a year ago but still far above the central bank’s 2% target.
Energy companies that made record profits last year are now feeling the pinch of falling prices. Natural gas producer EQT Corp. is down more than 8% this year after gaining 55% in 2022. Chesapeake Energy Corp. has lost more than 11% in 2023 after surging 46% last year.
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