Natural gas prices in the U.S. jumped more than 17% on Monday morning. They climbed past $6 per million British thermal units for the first time since late 2022. Winter Storm Fern triggered this move. The storm knocked out power for hundreds of thousands and canceled flights nationwide. The National Weather Service warned of wind chills dropping to -50 degrees Fahrenheit across much of the eastern U.S. this week. Such events often remind us how weather ties directly to energy costs. Business owners who rely on heating face these swings every cold season. Let us look at why this happens and trace it back over the past 50 years.
Natural gas heats homes, powers factories, and fuels electricity plants. Demand rises sharply in winter as temperatures fall. Supplies stored in underground caverns meet much of that need. But extreme cold can drain those reserves fast. Freezing weather also slows production from wells and disrupts pipelines. When demand outpaces supply, prices climb. This basic push and pull has shaped markets since the 1970s. Think of it like a family rushing to turn on extra heaters during a blizzard. The gas system works the same way on a national scale.
One early spike hit in the winter of 1976-1977. A brutal cold wave gripped the U.S. Midwest and Northeast. Temperatures stayed below zero for weeks. Storage levels dropped to critical lows. Spot prices tripled from fall levels, reaching over $2 per thousand cubic feet in some markets, high for that era. Factories cut production to save gas for homes. The federal government stepped in with emergency rules to ration supply.Â
Fast forward to the 1990s. The winter of 1993-1994 brought another shock. A polar vortex dipped south, freezing pipes and halting flows from the Gulf Coast. Prices spiked 400% in Chicago, hitting $6 per million BTUs briefly. Storage was only half full by January. Utilities begged customers to lower thermostats. This event pushed the industry to build more storage and pipelines over time. Companies adapted by diversifying energy sources, a lesson still relevant today.
The 2000s saw bigger swings. In 2003-2004, record cold across the northern U.S. sent prices above $10 briefly. Demand hit 90 billion cubic feet per day, far over normal. Low inventories from a mild fall left little buffer. Manufacturers idled plants, costing billions in lost output. Then 2014 brought chaos. A deep freeze called the “Polar Vortex” slashed output 20% and spiked prices to $8 in the Northeast. Some regions saw $50 peaks on tiny trading hubs. These years showed how interconnected regions amplify local shortages.
More recently, February 2021 tested the system again. Texas froze under an arctic blast. Power plants failed without winterized gear. Gas production fell 40% statewide. National prices surged 10% daily at times, with Henry Hub settling near $6. Refineries and chemical plants shut down, rippling through supply chains. Europe faced its own crisis that winter, but U.S. markets held firmer thanks to prior investments.
Today’s surge fits the pattern. Storm Fern mirrors past events with power outages and travel halts boosting heating needs. Storage sits at 80% full entering winter, solid but not endless. Cold this severe burns through 15-20% more gas daily. Higher costs pass to consumers, often with a lag.
Over 50 years, these spikes reveal a clear rhythm. Extreme cold arrives every five to ten years, often unannounced. Each time, markets recover faster due to expanded infrastructure. Shale drilling since 2008 added flexible supply. Storage capacity doubled to over 4 trillion cubic feet. Yet vulnerability lingers in prolonged freezes. Pipelines remain choke points in bad weather.
Energy buyers now use forecasts and contracts to hedge risks. Software tracks weather models weeks ahead. Still, no system beats physics. When wind chills hit record lows, demand rules. Firms that stockpile or switch fuels fare best. This history teaches preparation over reaction. As climates shift, winters may bring more surprises, but the core dynamics endure.
