Energy infrastructure failures and an underestimation of electricity demand exacerbate nature’s problems in the Appalachian Gas Basin before snowstorms hit. What’s happening could lead to higher LPG gas prices.

Natural gas supplies from the Appalachian Basin (the largest in the U.S.) are down 9 billion cubic feet (about 254 million cubic meters) or 27 percent from normal levels, Bloomberg NEF analysts found. This is a record high for this source of gas since 2013.

How will this affect natural gas prices?

LPG gas prices could rise on the back of these problems. The abnormally cold weather has frozen many wells, causing gas production in Pennsylvania to drop by more than 20 percent. Production in Ohio has more than halved, which in turn has limited supplies to the Northeast and the Tennessee Valley.

Mechanical problems in pipeline infrastructure have compounded ongoing problems with aging power grids and the fact that grid operators poorly forecasted power demand before the snowstorms began.

The record decline in Appalachian Basin production came at a time when extreme cold weather caused a surge in demand for raw materials used to heat homes and fuel power plants. This exacerbates the situation for many citizens who have lost access to electricity due to abnormal snowstorms. Natural Gas Futures are also on the rise.

A sharp cold snap through widespread state coverage has brought major power systems to the brink of disaster, exposing the weaknesses of the U.S. power system, which are expressed in limited gas reserves and the unpredictability of solar and wind generators. Bloomberg warns that such events could become more frequent as climate change leads to more extreme weather conditions.

We previously reported on the near-term potential surge in the value of oil on global markets.