The heat wave that swept across the U.S. in mid-July drove natural gas consumption for power generation to a record high as demand for air conditioning soared, the U.S. Energy Information Administration said Aug. 5.
The average maximum temperature exceeded 85 degrees Fahrenheit in most parts of the country during July 16-21, the agency said.
The higher-than-normal temperatures, combined with relatively low natural gas prices, caused a spike in gas-fired power generation. S&P Global Platts data showed that consumption reached 44.5 Bcf on July 19, which EIA said was likely a new daily record. The previous record of 43.1 Bcf, set in July 2018, was surpassed on five days in July.
Henry Hub prices averaged $2.31/MMBtu from June 1 to Aug. 1, 19% lower than the same period a year ago. Spot prices in other regions of the country have been even lower.
"Natural gas prices at the Chicago Citygate — the regional price benchmark for Midwestern states — have averaged 19¢/MMBtu lower than Henry Hub prices so far this summer. Regional spot prices in the Northeast, such as Dominion South in western Pennsylvania, have traded 30¢/MMBtu lower than Henry Hub," EIA said.
A number of natural gas-fired generators have come online throughout the country in recent years. The PJM Interconnection, the regional transmission organization responsible for managing wholesale electricity in 13 states and the District of Columbia, has added more than 12 gigawatts of new natural gas-fired generation capacity since the beginning of 2018.
S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.