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US gas storage drops below history
The United States keeps about 4 trillion cubic feet of working gas in storage, and the level rises and falls with the seasons as gas is drawn down in winter and rebuilt in spring and fall. Starting in the middle of 2028, the projection has storage breaking materially below its historical range. By 2029 it falls below all known storage history, and by 2030 it sits very low, all else equal.
Nothing like this has happened before, so past shortages are the only guide to what prices do. Gas went to $8 to $10 per thousand cubic feet after Russia invaded Ukraine, and weather anomalies such as a polar vortex pushed it to between $6 and $10. Those spikes were transitory. This one comes from structural demand set against a known ceiling on production, so the deficit grows steeper each year until it is convex and unbounded.
Today gas trades around $3.50 to $3.60, and the futures curve is flat through 2029 and 2030 because buyers still believe gas is abundant. At $8 or $10, some spot cargoes of exported gas might stop leaving the country, but that alone could not close the gap.
Why does gas storage swing with the seasons?
Homes and power plants burn far more gas in winter, mainly for heating, so storage is drawn down from roughly November through March. Producers keep pumping year round, so the surplus in spring and summer is injected back into underground reservoirs and salt caverns. The US Energy Information Administration publishes storage levels every week, and traders watch them closely against five-year averages.
Why do weather price spikes fade so fast?
A cold snap raises demand for a few days or weeks, and prices rise to ration that burst. When the weather normalizes, demand falls back and the same supply that looked tight is suddenly ample. Prices tied to short-lived events therefore tend to retrace, while a permanent rise in demand has no such release valve.
Why can a flat futures curve be misleading?
A futures price is the market's consensus about delivery on a future date, so it reflects what buyers and sellers believe today. If most participants assume abundant supply, the curve stays flat until new information changes that belief. Commodity curves have repeatedly stayed calm before sharp repricings, as happened with oil in 2007 and 2008.
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