After rising in recent months, natural gas spot prices at Henry Hub are heading downward, the Energy Information Administration said in its latest Short-Term Energy Outlook.
Amid mild weather across much of the country, Henry Hub spot prices fell in November, averaging $5.05 per million British thermal units (MMBtu), down from the October average of $5.51/MMBtu. Still, those readings were up from an average of $3.25/MMBtu in the first half of 2021.
The outlook, released Dec. 7, forecasts Henry Hub spot prices to average $4.58/MMBtu from December through February and then fall throughout 2022, averaging $3.98/MMBtu next year.
“The lower forecast reflects our expectation that U.S. natural gas inventories will finish the withdrawal season at the end of March at a higher level than previously expected," the report said.
Because of overall higher natural gas spot prices, EIA expects the fuel's share of electricity generation will dip from 39% in 2020 to 37% in 2021 and 35% in 2022. Electricity from coal is expected to rise from 20% in 2020 to 23% in 2021 and then drop slightly to 22% next year.
And the share of renewables is expected to average 20% in 2021, about the same as last year, before rising to 22% in 2022. New additions in solar and wind have been offset somewhat by reduced generation from hydropower this year.
In good news for holiday travelers, EIA is forecasting some relief from rising gasoline prices. In November, a gallon of regular gasoline averaged $3.39, the highest since September 2014. But this month, EIA predicts that retail gasoline prices will average $3.13 per gallon before falling to $3.01 in January and averaging $2.88 in 2022.