Natural gas prices soared to a record high Monday just as a brutal late-fall storm socked the Midwest and bitter cold was in the forecast for the next few days.
The soaring prices could almost immediately show up as increases in consumers' heating bills, analysts said. The vast majority of Lawrence-area residents heat with natural gas or gas products.
Prices rose as much as 13 percent, hitting a high of $9.65 per 1,000 cubic feet in regular trading on the New York Mercantile Exchange. Prices closed up 82.9 cents, or nearly 10 percent, to $9.41 per 1,000 cubic feet.
Phil Flynn, vice president and senior energy analyst at Alaron Trading in Chicago, said a storm that was expected to dump up to a foot of snow on Chicago raised fears that utilities may not have enough natural gas stored to get through a harsh winter. With the current cold spell expected to last several days, utilities were bidding top dollar for gas to meet rising demand. U.S. inventories of natural gas are 17 percent lower than they were a year ago.
Cold weather in the Pacific Northwest also contributed to the rise in prices, he said.
"It's more of a psychological situation than a real situation right now," Flynn said. "I would expect that the first big break in the weather will bring a break in the market."
Natural gas, once thought of mainly as a source for winter heating, has become a year-round fuel used to generate the electricity that powers air conditioners and computers. But that rise in use has not been accompanied by an equal growth in capacity, so supplies are tight.
Even before Monday's jump, Americans were expected to pay 50 percent more this winter to heat their homes with gas than last year, the U.S. Energy Information Administration estimated last week.