U.S. power and natural gas prices in the Midwest and on the West Coast soared to multiyear highs as extreme cold and snow blankets much of the country, freezing oil and gas wells and causing pipeline constraints that limit the flow of gas into California.
Gas output was on track to drop about 4.7 billion cubic feet per day (bcfd) over the past three days to a preliminary seven-month low of 94.3 bcfd on Thursday as freezing weather covers much of the country, causing wells to freeze in Texas, Oklahoma, North Dakota, Pennsylvania and elsewhere.
That would be the biggest daily drop in output since the February freeze of 2021 when Winter Storm Uri cut gas supplies from Texas and forced the Texas electric grid operator to impose rolling power outages.
One billion cubic feet is enough gas to supply about five million U.S. homes for a day.
In Northern California, next-day gas prices for Thursday at the PG&E Citygate jumped to a record high of $56 per million British thermal units (mmBtu), topping the prior all-time high of $53 in December 2000, according to data from Refinitiv.
Gas at the Southern California (SoCal) Border rose to $48 per mmBtu, its highest since hitting a 22-month high of $50 last week.
SoCal prices hit a record $136 during the February Freeze of 2021.
That puts PG&E gas on track to average $9.21 per mmBtu in 2022, which would be its highest since hitting an annual record $8.62 in 2008, according to Refinitiv data going back to 2000.
SoCal Border, meanwhile, is on track to average $8.95 per mmBtu in 2022, which would top its current annual record of $6.29 in 2021.
In Chicago, next-day gas for Thursday jumped 248% to $18.76 per mmBtu, its highest since the February freeze of 2021, while gas in Texas at the Waha hub in the Permian Shale soared 87% to a three-month high of $7.35.
Next-day power for Thursday jumped to $560 per megawatt hour (MWh) at the Mid Columbia (Mid C) Hub in Washington State and $475.00 in SP-15 in Southern California, their highest since September, according to data from the Refinitiv.
In September, daily prices at the Mid C hit a record of $1,040 per MWh, while SP-15 hit $550, its second highest ever.
SP-15 hit a daily record of $698 per MWh in August 2020 when an extreme heat wave forced California’s power grid operator to impose rolling outages.
That puts Mid C on track to average $91.58 per MWh in 2022, which would top its current annual record of $64.94 in 2008, according to data from the Intercontinental Exchange.
SP-15, meanwhile, is on track to average $88.15 per MWh this year, which would be its highest since hitting an annual record of $124.94 in 2001, according to ICE data going back to 2001.