Energy prices are rising, and winter heating is going to be expensive. In this easy-to-understand guide, you’ll learn why—and what to do about it.
There are a lot of questions right now around rising natural gas prices, and rightfully so: Why is natural gas going up? Is winter heating going to be super expensive? Why are electricity bills going up right now too?
In this article, we’ll cover the following in plain language:
- The reason why natural gas is so expensive lately
- What’s driving natural gas prices up
- The connection between your electric bill and natural gas prices
- An easy-to-understand natural gas price forecast for the 2022-2023 winter
- What your utility does to try to mitigate higher energy costs
- The best ways to lower your energy spend and curb energy waste
- How to fix the #1 energy-waste problem in your house—for little or no upfront cost
Key takeaway from this guide: The rising cost of natural gas affects every single one of us, whether you use natural gas in your house or not.
Why? Even if your home is 100% powered by electricity (what some call an electrified home), the price of natural gas directly affects your electric bills as well.
And to be even more upfront: The rising costs of energy are a driving factor in current inflation rates in general.
This means everyone is seeing an increase in their energy bills—and especially high heating bills this winter—on top of those rising grocery bills. (And we’ll explain why.)
With rising energy costs, it’s more important than ever to make sure you’re not wasting energy. You’ll learn not only why natural gas prices have increased, but also what you can do about it.
Why is natural gas so expensive lately?
Natural gas has been more expensive lately because the cost of natural gas is tied to both national and international events that impact global supply and demand.
Some of the factors that play a part in rising costs include:
- Increased usage of natural gas to generate electricity
- International demand for U.S. liquidized natural gas
- Return of economic activity following pandemic shutdowns
- Higher production costs due to inflation and supply chain disruptions from COVID-19
- Geopolitical events—like the war in Ukraine
- Natural disaster events, like hurricanes in the Gulf of Mexico
According to National Fuel Gas, one of Sealed’s utility partners, the U.S. demand for natural gas increased 3% in 2021–2022 due to colder temperatures and a slight increase in industrial demand.
Although natural gas can be one of the least expensive ways to heat your home, it can also be impacted by global events—just like gasoline can.
(Speaking of ways to heat your home: If you’re looking for the most energy-efficient way to stay warm in the winter and cool in the summer, check out our guide to heat pumps to learn why they’re 3x more efficient at heating your home than traditional HVAC systems. Install a heat pump at no upfront cost with Sealed if your home qualifies.)
Get the best tips and problem-solving guides for the most comfortable, efficient home no matter the weather.
What’s been driving natural gas prices up over the last 2 years?
Let’s go back to the basics of high-school economics: The natural gas supply and demand balance has gotten tighter over the last year. There’s a greater demand for natural gas than the ability to deliver the supply where it is needed.
Global demand for natural gas continues to rise—including here in the U.S.—but U.S. production has not kept up with the global demand… which increases pressure on the cost.
There are a few core factors behind the big price and supply changes that we’ve seen in the last 24 months:
- Colder winters and hotter summers. People used more energy to heat and cool their homes this year compared to last year. And power plants rely on natural gas to generate electricity for cooling during peak-use times, like hot summer days.
- Pandemic-related labor shortages in the U.S. lowered the ability to increase natural gas production alongside the demand. At the same time, there’s been an increase in economic activity post-COVID shutdowns—and increased energy demands have followed suit, according to our partners at National Fuel.
- The political conflict in Europe has affected the availability of Europe’s natural gas supply. Russia is Europe’s largest natural gas producer. In response to this conflict, the U.S. has increased liquified natural gas (LNG) exports to help satisfy global demand.
- Energy costs, in general, have increased. The prices of gasoline, coal, propane, and oil have increased too.
- Infrastructure capacity plays a big role. The ability to increase Northeastern U.S. natural gas production is limited because all pipelines in this region were full and new pipeline and LNG export terminal projects have faced regulatory delays.
Another big factor: 2022 summer gas purchased for winter storage was priced higher than previous years
Energy providers (like utilities) often purchase natural gas during the summer when prices are generally lower and store it to meet winter use.
Using this storage of natural gas during the winter, rather than buying wintertime gas at a higher price, can be a cost-effective way to manage the peak use of natural gas during the heating season.
But right now, the increased summer demand for natural gas has contributed to higher prices for supplies being put into storage for the upcoming winter season.
This means that the utility prices you pay in winter of 2022 to early spring of 2023 may be significantly higher than previous years, as the cost of stored natural gas needed for winter reliability was purchased at a higher price.
By the way, one of the best ways to insulate your wallet from rising energy prices is to insulate and air seal your home. (You can check with Sealed or your local utility for any special weatherization rebates that might be available to you.)
Next up, let’s talk about why your electricity costs increase when natural gas prices rise.
How natural gas and electricity prices are related
When natural gas costs go up, energy costs for everyone go up—no matter what type of energy you use… because natural gas is used to generate a good chunk of the electricity you use in your home. (Unless you’re reading this and have gone entirely off-grid, of course. If so, go you!)
Since a good chunk of electricity in the U.S. is produced by this type of fuel, when its price increases, your electric bill increases, too.
Domestically, the U.S. has increased its use of natural gas while decreasing our use of coal and nuclear energy. Natural gas also provides a cleaner fossil fuel backup to renewable energy resources, like wind and solar energy, which are based on forecasted weather patterns.
Winter Natural Gas Prices Forecast 2022-2023
With all the summer talk of high natural gas prices, what will happen this winter?
(Spoiler alert: Winter heating for 2022-2023 is going to be more expensive.)
Will energy prices rise during the 2022-2023 winter?
The short answer is yes—energy prices, including natural gas and electricity, will be more expensive during the 2022–2023 winter compared to last winter. You’ll see this increase show up on both your gas and electricity bills.
While news sound bites might attribute this increase to general inflation, the reasons behind your natural gas and electric bill increases are more complex. Tap here to see the above list covering the core reasons for price increases.
Recent updates from the U.S. Energy Information Administration (EIA) suggest that national gas prices have peaked this summer but will remain elevated throughout the upcoming winter.
(And remember, that’s partly due to the costs to purchase the yearly summer storage of natural gas were significantly higher than years past.)
For a deep dive on increased winter heating costs in plain language, check out Why is my heating bill so high?
While there may not be much you can do about higher energy costs that fluctuate based on the market, it’s more important than ever that you’re not wasting energy.
(Did you know that the same things that cause major energy waste in your home also cause it to be really uncomfortable? It’s true.)
At Sealed, we can help you make your home more efficient with no upfront costs. And you pay us back for the work done based on the energy you save. Learn how it works.
(Plus, New York homeowners are eligible for at least $1,000 off their project with Sealed if they install by December 31, 2022.)
Take our fun two-minute quiz to see if your house qualifies to work with Sealed.
How high will winter 2022-2023 gas bills be?
Based on the current market prices, National Fuel expects that the average residential natural gas bill for those who live in New York to be $949 per customer for November 2022 through March 2023. Expected increases on the average winter heating season bill can range from 40% to 50% from the previous winter.
However, your utility bill costs may look different, as heating bill costs are dependent on factors like:
- What state you live in
- What energy provider you use
- The square footage of your home
- The type of heating system you use
- How efficient your heating system is
- Your temperature preferences
- If your house has been insulated and air sealed
- The outside temperatures during the 2022-2023 winter months
The EIA will announce its national 2022-2023 winter energy price forecasts in October, but by then, winter weather and higher energy prices will be right around the corner.
Don’t wait until high heating bills get here to do something about your house’s energy waste. Call Sealed today at 888-985-7481 to learn how you could cut your energy usage by up to 50% through powerful home efficiency upgrades (at no upfront cost).
Will natural gas prices go up in 2023?
According to the EIA, natural gas prices are predicted to go down slightly in 2023 as global natural gas production continues to increase throughout 2022 to meet international demand (5).
That means you could see a change in your energy bills by next summer, but it’s likely to be a small decrease.
However, because natural gas prices are based on complex geopolitical circumstances, no local utility company—including National Fuel—can predict what your specific energy use costs will look like. There are just too many factors involved.
Will energy prices go down in 2023?
Remember, no one can predict the future.
Your best bet is to get ahead of fluctuating costs by stopping home energy waste. And you can partner with your utility company in doing so.
But first, let’s take a look at what your utility company does to lower costs as much as possible on their end.
What does your utility company do to mitigate winter price spikes?
In most cases, utility companies rely on their storage of gas inventories to mitigate high winter demand.
Storage gas can give you more stability in winter natural gas prices, but it doesn’t necessarily mean that the price of the fuel will be lower.
But remember, this summer’s natural gas prices were higher than previous summers—and the prices for the 2022-2023 winter are also projected to be higher—because of increased global demand and domestic factors that have lowered U.S. supply.
Utility providers attempt to reduce energy waste to lower their—and your—costs. (It benefits both you and your utility when you use less energy. Learn more in Why your energy utility wants you to use less energy here.)
Your utility company might incentivize you to use less energy in a couple of different ways, including:
- Offering energy-efficiency home improvement rebates and programs
- Providing additional education about energy efficiency and how to cut energy waste
Are you a National Fuel customer? Check out their energy-efficiency site to learn about the many programs available at fuelingtomorrowtoday.com.
Something to keep in mind: It’s a common misconception that every utility company profits from higher energy prices (like the rising cost of natural gas) or when you use more energy. Let’s take a closer look together.
How are utility prices decided?
Your utility company charges you for three things:
- Supplying energy: This includes the cost of purchasing, storing, and transporting gas into your utility’s system. These costs are passed to you in your bill dollar for dollar—with no additional markup. (Utilities, like National Fuel, don’t actually profit when natural gas supply costs rise.)
- Distributing and transporting energy. Your utility uses infrastructure (regional transmission pipelines, city distribution pipelines, and service lines) to send energy—like natural gas—to your home. Utility providers can earn a rate of return from the infrastructure they provide to you and your community.
- General operations and maintenance. Basically, like in any business, operation costs (such as labor, equipment, and customer service) are woven into the price a customer pays for goods and services.
Regulated utility costs—which include distribution and operation costs mentioned above—are regulated by state utility commissions. For example in New York, the New York Public Service Commission regulates National Fuel. And the Pennsylvania Public Utilities Commission is the regulatory agency in the Commonwealth.
Unregulated supply costs—which include your utility’s cost of purchasing natural gas for its customers—fluctuate based on energy markets. Your utility company doesn’t (and can’t) control these costs.
That means high energy costs aren’t fun for anyone—and they negatively affect us all.
Depending on the state you live in, utility companies often earn profits through the services and infrastructure they provide, not the energy supply costs themselves.
That’s why everyone benefits from reducing energy waste.
You could cut up to 50% of your energy use when getting high-performance insulation, professional air sealing, and heat pump HVAC upgrades with Sealed. Learn how.
What you can do to take the edge off high energy costs
The best way to curb fluctuating utility bills is to reduce your home’s energy use.
Now, there are many ways you can do so: Some ways are quick and help reduce small amounts of energy, while other changes are bigger but have a large and lasting impact.
We’ll break down both below.
5 quick tips you can implement immediately
- Look into what billing options your utility offers. Some utilities allow you to pay for the energy you use through fixed monthly costs.*
- Get a programmable smart thermostat. They’re a low-effort way to cut energy waste, and many utilities provide thermostat rebates.
- Weatherstrip your doors and windows to reduce drafts.
- Fully upgrade to LED lightbulbs (if you haven’t already).
- Keep yourself comfortable and safe, but conserve. If lighter clothing in summer and warmer clothing in winter can help reduce your thermostat settings, it’s worth a try.
To learn more, check out these energy-saving tips from National Fuel.
And make sure to visit your local utility’s website to see if they have incentives and rebates—you may be able to purchase some of these helpful items at a reduced cost. Check out this guide to local utility incentives and energy rebates.
Fix the biggest energy-wasters in your home
Did you know that your heating and cooling system uses more energy than anything else in your home? (8)
51% of your home’s energy consumption is for heating and cooling alone.U.S. Energy Information Administration
But guess what? Anywhere from 25–40% of the energy you pay to heat and cool your house is also lost through air leaks (9).
One of the most impactful ways to reduce the energy used by your HVAC system is to make sure your home is well-weatherized (aka well-insulated and air sealed).
Your heating and cooling systems can be expensive to run—and may not do a very good job keeping you comfortable—if you have insufficient insulation and haven’t air sealed your home.
Natural gas prices are the highest they’ve been since 2008 (10). So even if you took the initiative to combat rising energy prices through insulation upgrades during the last energy-cost spike, it’s likely time to upgrade again.
Why? Insulation degrades over time—and depending on when your house was built, some areas might not be insulated at all.
Bonus: Cutting wasted energy by weatherizing can also make your home feel better on both the coldest and hottest days of the year. It’s always a win when you can make your home feel amazing while stopping energy waste at the same time.
Get energy-efficiency upgrades—at no upfront cost—with Sealed
You’re concerned about rising energy bills, and so are we.
At Sealed, we’re on a mission to make every home feel amazing—permanently—and cut energy waste for good.
You can say goodbye to drafty winters, stuffy summers, and curb energy waste by getting whole-home weatherization by the experts at Sealed.
Here’s how we do it:
- You get high-performance insulation, air sealing, and heat pump HVAC upgrades to make your home more comfortable while significantly reducing the energy your house uses. And we take a customized approach: You get the upgrades you need… and nothing you don’t.
- Sealed hires expert local contractors, pays for all the costs upfront, and manages the project from start to finish.
- You pay us back for the work done at a rate based on the energy you save. (If you don’t save energy, we don’t get paid.)
- We partner directly with your energy provider (like National Fuel Gas if you’re in New York) to pay for your efficiency upgrades with the money you save on your energy bills.
Ready to weatherize your house against rising energy costs… before winter gets here?
Take our fun 2-minute quiz to see if your house qualifies.
If I don’t have to spend any extra money to get a huge improvement to my home, it’s just a no brainer at that point.Scott. R, Sealed customer
*If you’re a National Fuel customer, National Fuel recommends its customers use the Budget Plan for predictable, stable monthly payments by estimating usage over a 12-month period. It is also available for 10-months from September through June.