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Bridge Michigan
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Opinion | Don’t panic, home heating costs won’t skyrocket because of Ukraine

Many of us have watched in horror as Russia invaded Ukraine and destroyed the lives of innocent civilians and families. We’ve looked on in awe as the Ukrainian army has defied the odds both in the air and on the ground, and as front-line workers – including utility employees – have continued to provide critical services amid unthinkable tragedy. And of course, we have also considered what the invasion means here at home, and what kind of disruption it may cause in our own lives.

Cedric Flowers
Cedric Flowers is vice president of operations for DTE Gas. (Courtesy photo)

Beyond the emotional impact we’ve felt, the next immediate impact on U.S. citizens has been to our pocketbooks, in the form of rising prices at the pump and the grocery store, leaving household budgets in limbo. At DTE Gas, we have received many inquiries about the impact of the unrest on the cost of natural gas, with Russia controlling 40 percent of the European Union’s natural gas supply. Natural gas, used in our homes and businesses, is a different fuel than the gasoline that we pump into our vehicles, and has its own market pricing.

At this time, despite the war in Ukraine and ongoing disruption to Europe's energy markets, we expect natural gas prices for Michigan homeowners and businesses to remain relatively stable in comparison to other commodities. For DTE customers in particular, our buying strategy locks in the cost and supply well before the natural gas will be needed. We have already planned ahead for next winter, locking in 75 percent of the supply and providing price certainty during this period of market volatility.

We also have strong agreements in place with suppliers across the country, including in one of the most prolific natural gas basins in the world, the Appalachian Basin, which includes the Marcellus and Utica Shale plays. The Marcellus-Utica, located in the Appalachian Mountains, hit an all-time high production record in March. This region also happens to supply some of the cleanest natural gas in the country, making it a robust solution for safe and reliable energy.

As Michigan residents keep an eye on prices further into the future, the basic law of supply and demand will apply. Those watching the market can consider how much supply the United States has, and how much demand there is, both here and abroad. Several key indicators of supply and demand will dictate the market price for natural gas in years to come.

The European Union’s demand for U.S. natural gas is expected to increase as a result of its continued effort to move away from natural gas production, as well as its desire to reduce dependence on Russia. For that reason, U.S. exports of liquefied natural gas are projected to be higher next year and will increase further as new U.S. export and EU import capacity comes online.

Meanwhile, U.S. natural gas production is projected to increase next year to keep up with demand that has been driven by our country’s economic rebound from COVID-19. In fact, production is expected to increase faster than the rate of exports, keeping the U.S. supply of natural gas stable for next winter. It will be critical for federal and state governments to be supportive of increased production to maintain the needed supply. The market will likely be volatile with the push and pull of supply and demand, but DTE Gas customers will be protected, as always, by our long-term approach to providing reliable natural gas.

In times of crisis, we are often reminded of the commodities we rely on most and the workers that labor tirelessly to deliver these products safely. The reliability of natural gas should give Michigan residents a sense of comfort amid the continued disruption.

Bridge welcomes guest columns from a diverse range of people on issues relating to Michigan and its future. The views and assertions of these writers do not necessarily reflect those of Bridge or The Center for Michigan. Bridge does not endorse any individual guest commentary submission. If you are interested in submitting a guest commentary, please contact Ron French. Click here for details and submission guidelines.

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