In our previous FRED Blog post, we argued that the price of electricity varies by region and fluctuates but does not appear to increase with respect to other goods. Today, we take a quick look at the price of natural gas.

In the FRED graph above, we’re looking at the price of natural gas at a particular location: the Henry Hub in Erath, Louisiana. This is the connection point of several natural gas pipelines, and local markets are typically priced by a differential from the Henry Hub price. We use monthly prices here to avoid the wild fluctuations of daily prices.

So, how has this reference price for natural gas evolved? It is striking how it’s now the lowest it has ever been. And we haven’t even taken into account the inflation in general prices since the start of this data series. The main factor has been the big increase in the supply of natural gas, in particular through fracking. Another factor has been the building of many pipelines, which allow suppliers to avoid higher prices through arbitrage.

There have been fluctuations, though. One recent example is the winter of 2022, when Russian pipelines in Europe closed at the start of the invasion of Ukraine and increased worldwide natural gas prices. This shock resolved in a year thanks to major energy conversion efforts across Europe.

How this graph was created: Search FRED for “natural gas price” and take the monthly series.

Suggested by Christian Zimmermann.