Natural Gas Prices Soar

  The information released on December 8th states that with natural gas prices soaring to a three-year high, coal has become a cheaper fuel for electricity generation for American utility companies. These companies plan to increase the operation of coal-fired power plants during the winter season.

  The Henry Hub natural gas price in the United States has increased from $4.23 per million British Thermal Units (MMBtu) at the beginning of November to over $5 per MMBtu at the beginning of December. Earlier on Friday, the near-month futures price was $5.084 per million British Thermal Units.

  This is the highest price in three years because of the severe cold weather caused by the recent polar vortex and blizzards sweeping most of the United States. At the same time, U.S. liquefied natural gas (LNG) exports continue to set new records due to the acceleration of liquefaction and transportation at new plants.

  The U.S. Energy Information Administration (EIA) stated in its latest Natural Gas Weekly report that natural gas futures prices have reached their highest levels since December 2022 in recent months.

  The report also shows that total natural gas inventory as of the week ending December 3rd was 392.3 billion cubic feet. Although this is 5% above the five-year average, it represents a 1% decrease compared to the same period last year.

  Although natural gas inventory levels are above the five-year average, due to a surge in heating and electricity demand as the weather turns colder and U.S. liquefied natural gas (LNG) exports hit new highs, natural gas prices are rising rapidly

  The U.S. Energy Information Administration (EIA) stated in its latest Short-Term Energy Outlook (STEO) that U.S. liquefied natural gas (LNG) exports will reach 14.9 billion cubic feet per day this year, an increase of 25% from 2024. The Louisiana Plaquemines LNG facility's export volume growth exceeded EIA's expectations, so the government has increased this quarter's LNG export forecast by 3% compared to last month's projection. According to EIA forecasts, in 2026, the United States' LNG exports are expected to increase by an additional 10%.

  As a result, soaring U.S. natural gas prices have made gas-fired power generation more costly for power companies, some of which are planning to increase capacity from cheaper coal-fired power generation.

  The U.S. Energy Information Administration (EIA) in its latest Short-Term Energy Outlook (STEO) predicts that the average annual price of natural gas paid by power plants will increase by 37% in 2025, and the price paid by industrial sector customers will be 21% higher than the average in 2024.

  The average Henry Hub natural gas spot price in 2026 is $4.00 per million British Thermal Units The average price is expected to be 16% higher in 2025, mainly due to flat natural gas production and a surge in liquefied natural gas (LNG) exports.

  In terms of coal, there has been an increase in production this year, thanks to the support from the Trump administration and rising natural gas prices.

  The U.S. Energy Information Administration (EIA) states that the increase in coal production in 2025 is due to rising demand. Reasons for increased demand include higher natural gas prices, delays in coal-fired power plant retirement plans, and strong demand during heating months earlier this year. EIA estimates that coal inventory for power generation will reach 107 million short tons (MMst) by the end of the year, which is 17% lower than the level at the end of 2024.

  The rising natural gas prices are paving the way for increased coal usage in the coming months. However, the surge in electricity demand caused by artificial intelligence may also support the quiet return of coal in the coming years.

  U.S. Energy Secretary Chris Wright told Reuters in September that due to the surge in demand for electricity driven by artificial intelligence, most coal-fired power plants may have to delay their retirement.