Colorado residential natural gas prices close in on 2006 record

Matt Whittaker

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Natural gas flame burning on a stove. Natural gas is a key source of energy throughout the world.Diverse Stock Photos/Flickr

By Matt Whittaker / NewsBreak Denver

(Across Colorado) Colorado residents last year paid the most for natural gas since the record was set in 2006, new data from the U.S. Energy Information Administration showed Monday.

In 2021, the price of natural gas delivered to residential customers averaged $9.19 per thousand cubic feet, the highest since the 2006 record of $10.45.

When adjusted for inflation, that 2006 number comes in at $14.05 in 2021 dollars, but that's probably not much consolation for Coloradans who have already been facing sharply higher energy bills this winter as global demand for natural gas outstrips supply.

Meanwhile, Russia’s invasion of Ukraine has stoked fears of disruptions in the global oil, natural gas and wheat markets, raising prices for those commodities and increasing the likelihood that Coloradans will pay more for energy and food when inflation is already high.

The consumer price index for Denver, Aurora and Lakewood rose 7.9 percent in the year through January, higher than the 7.5 percent national number. Over that time, local food prices rose 7.3 percent, household energy costs jumped 8.4 percent and gasoline rose a whopping 38.4 percent.

Customers of Xcel Energy, the largest utility in the state and the main natural gas and electricity provider in the Denver metro area, saw January energy  bills jump 37%, or about $100 for Denver residents.

Even before the Russia-Ukraine crisis, natural gas prices were on the rise as the worldwide economic recovery from the pandemic generates more demand for energy even as supply hasn’t recovered. Supply isn't keeping up with demand partly because there has been less drilling for oil, which is often pumped out of the ground alongside natural gas. 

Prices for natural gas abroad are generally much higher than they are in the United States, which thanks to the shale fracking boom is the largest producer of the commodity in the world.

That price difference has foreign companies eager to buy natural gas in liquid form from U.S. exporters, helping keep the domestic supply tight.

The Energy Information Administration expects domestic natural gas consumption to remain about the same this year compared with 2021. But in 2023 it expects consumption to increase as more use of the commodity by industrial consumers is only slightly offset by a decline in its use for electric power as more renewable plants come online.

Earlier this month, state regulators took public comments on a plan requiring natural gas utilities to reduce greenhouse gas emissions and let utilities charge more for natural gas.

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Matt Whittaker writes about natural resources industries, including oil and gas, mining, renewable energy, agriculture and cannabis. He's been based in the Denver metro area since 2013. You can follow him on Twitter @mattswhittaker.

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