NEW YORK (CNNMoney) — Natural gas prices have surged over 70% during the past three months, fueled by increased air conditioning use, a switch from coal in power plants, and declining production rates.
The price for natural gas at Henry Hub, a junction of pipelines and storage facilities in Louisiana, has gone from $1.85 per million British thermal units in April to $3.14 Tuesday — a seven-month high.
“Hot weather forecasts and elevated cooling demands continue to provide a boost to the market,” Addison Armstrong, director of market research at the brokerage Tradition Energy, wrote in research note Tuesday.
Natural gas-fired power plants can be turned on and off relatively quickly, and as such are generally used by utilities to generate electricity during times of peak demand, like during a heat wave.
This June was the 14th hottest June on record, with temperatures nationwide two degrees above the twentieth century average, according to the National Oceanic and Atmospheric Administration.
