US natural gas prices surge to 14-year high. What it means for your heating bill

Turns out the number at the pump isn't the only gas price to worry about. 

U.S. natural gas prices are also up, which means it may cost more to heat a home this winter. 

The Henry Hub, the U.S. benchmark for natural gas, settled at $9.19 per million British thermal unit for September deliveries on Tuesday – more than double its settling price a year prior. U.S. natural gas futures this week have been trading at levels not seen since 2008, before the shale gas revolution that enabled the U.S. to ramp up its natural gas production. 

"Unfortunately, higher gas prices will be coming for the American consumers," Eugene Kim, a research director focusing on natural gas with energy consultancy Wood Mackenzie, told USA TODAY. "When we need to turn on our heaters, that's when we'll start to see some material increases in our gas bills."

Why are natural gas prices so high? 

Robert Yawger, director of energy futures at financial company Mizuho, said there is a "two-pronged attack" causing natural gas prices to spike.

The first is the energy crisis in Europe, which has raised concerns about supply shortages this winter.

The second is beaten-down natural gas storage levels in the U.S. The summer's above-average temperatures kept air conditioners on and elevated electricity demand, leaving less natural gas for storage.   

Working natural gas in storage was 2.5 trillion British thermal units as of Aug. 12, down 10.5% compared to the year prior, according to the U.S. Energy Information Administration. The energy agency expects natural gas inventories to end this year's injection season 6% below the five-year average.

"We've not really had an opportunity to put as much gas into storage and catch up ahead of winter," Yawger said.

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What does this mean for my energy bill?

Natural gas prices have already affected electricity bills. Looking forward, they could make winter heating costs “way more expensive” than what U.S. households are used to, Yawger said. 

"People are going to be upset about that," Yawger said. "At least as upset they were about $5 gasoline around Memorial Day."

Prices will vary, depending on location and how low temperatures drop this winter. 

Kim of Wood Mackenzie noted that areas in the Northeast tend to pay more for natural gas due to a lack of pipeline infrastructure. And if the upcoming winter is harsher than expected, heating costs could inflate if utilities need to purchase additional natural gas from the more expensive spot market.

"(If) it's a normal winter, we will still be faced with higher heating bills, but it won't be a significant increase," Kim said. "Luckily, it is a La Niña winter being forecast, which generally means a milder winter."

But if weather forecasts are wrong? Low inventory levels could lead to "super spike" in natural gas prices, according to Neal Dingmann, managing director of energy research for bank holding company Truist. 

How does this tie into inflation?

Higher natural gas prices could compound the high inflation rates U.S. households have been facing this year by raising operating costs for manufacturers, Yawger said.  

“It’s a sword in the side of the Fed, who are basically trying their best to reel in inflation,” he said. “Winter’s going to be a big problem for them.”

Consumer prices in July increased 8.5% from a year ago, according to the Labor Department's Consumer Price Index.  

Dingmann agreed that natural gas prices will likely "put a whole new pressure" on inflation. 

"There's not a quick fix," he said. 

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