World News | Plunging natural gas prices ease inflationary pressures

NEW YORK, Feb. 16 (AP) — Prices for natural gas, which is used to heat homes and generate electricity, have plummeted this year thanks to mild winters in the United States and Europe — bringing some comfort to consumers and helping keep inflation down.

In the United States, the fuel, largely extracted from shale deposits near Texas and Pennsylvania, accounts for nearly 25% of residential energy demand, making it a key driver of the worst bout of inflation in four decades last year. U.S. natural gas prices have fallen 40% so far this year since the start of 2023, and prices in Europe are not far behind.

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Much warmer-than-expected weather across Europe and North America has largely enabled European supplies to hold out amid the ongoing conflict in Ukraine. Winters are mild enough that large swathes of the Alps are mostly green, not white, while the typically cold and snowy parts of the US stay well above freezing throughout most of the winter.

A large surplus of natural gas is also helping to keep prices down. U.S. inventories are expected to end March 16% above the five-year average, according to the Energy Information Administration.

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The broad slowdown in inflation comes amid sharp falls in energy prices as the Federal Reserve and other central banks combat high prices by raising interest rates. Inflation was around 6.5%, well below a year ago but still well above the central bank’s 2% target. The Fed said it would continue to focus on fighting inflation until it determined that prices were on a sustained downward path.

Energy companies that posted record profits last year are now feeling the pressure from lower prices. Natural gas producer EQT Corp. is down more than 8 percent this year after rising 55 percent in 2022. Chesapeake Energy Corp. is down more than 11% in 2023 after surging 46% last year. (Associated Press)

(This is an unedited and auto-generated story from a Syndicated News feed, the content body may not have been modified or edited by LatestLY staff)