Over the past month, natural gas prices have experienced a significant rally driven by colder-than-average temperatures, increased heating demand, and tightening supply conditions. Heating Degree Days (HDDs) have exceeded historical averages, leading to heightened withdrawals from storage.
Adding to market volatility, recent U.S. tariffs on energy imports have introduced new uncertainty into the marketplace. Effective March 4, 2025, a 10% tariff was imposed on Canadian natural gas imports and a broader 25% tariff on all Mexican imports.
These events have a direct effect on wholesale power prices, which have risen accordingly. With natural gas-fired generation representing a substantial portion of U.S. electricity supply, any elevation in natural gas prices translates into higher electricity rates. The EIA forecasts that wholesale power prices will average $40 per MWh in 2025, a 7% increase over 2024, largely driven by these rising natural gas prices.
