Expect RI’s Natural Gas Prices to Spike as a Result of Russia’s Attack on Ukraine

Expect RI’s Natural Gas Prices to Spike as a Result of Russia’s Attack on Ukraine

Rhode Island is overwhelmingly dependent on natural gas as a source of fuel for electricity production and for home heating. The price of natural gas and liquid natural gas are spiking across the globe as a result of the Russian invasion of Ukraine.  The attack is destabilizing natural gas and oil prices.

In 2020, natural gas fueled 89% of Rhode Island's electricity net generation, the largest share of any state, according to the U.S. Energy Information Administration.

For Rhode Islanders, natural gas is going to get a lot more expensive. The Russian invasion of Ukraine will have far-reaching impacts across the globe.

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Driving More Inflation

The energy price spikes will further impact inflation which is now at 7.5% -- a 40 year high.

“'We have not had such a large and broader-based overshoot of inflation in decades,' Bruce Kasman, chief global economist for J.P. Morgan told the Wall Street Journal. The bank estimates that inflation will begin to recede about midyear, but Mr. Kasman said a sustained shock could push inflation higher instead. If that happens, 'The Fed is going to have some very difficult choices.'”

Russia supplies about 35% of the natural gas used across the European Union. With Germany freezing the Nord Stream 2 pipeline, things could get pretty dicey, especially with another month of winter left. Russia produces about one in 10 barrels of oil globally, so any conflict involving it is deeply worrying to oil traders.

The Nord Stream 2 project, which effectively doubles the capacity of an already operational Nord Stream pipeline, has been completed but cannot start operations until Germany’s energy regulator gives the go-ahead. German leaders have announced that the Nord Stream 2 Project is now on hold due to the Russian invasion.

“The flow of natural gas in Europe is more likely to be disrupted by conflict in Ukraine than the flow of oil, analysts say. The price of natural gas jumped almost 19 percent to 105.6 euros a megawatt-hour on the TTF exchange in the Netherlands,” reports the New York Times.