California Governor Urges Federal Inquiry Into Surging Natural Gas Prices

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by Tyler Durden
Tuesday, Feb 07, 2023 - 10:00 PM

Authored by Tsvetana Paraskova via,

California’s Governor Gavin Newsom has called on the federal authorities to launch an investigation into the soaring natural gas prices in California and the rest of the Western U.S., as customers have been warned they would receive high gas utility bills.

In a letter to the Federal Energy Regulatory Commission (FERC), the agency responsible for regulating wholesale natural gas, Governor Newsom requested that the agency “immediately focus its investigatory resources on assessing whether market manipulation, anticompetitive behavior, or other anomalous activities are driving these ongoing elevated prices in the western gas markets,” the governor’s office said in a statement on Monday.

“Since late November 2022, wholesale natural gas prices throughout the West have risen to alarming levels that greatly exceed prices in the rest of the country,” Governor Newsom said in the letter.

“These wholesale natural gas price increases were exacerbated by early cold weather in the western states, but those known factors cannot explain the extent and longevity of the price spike.”

The wholesale prices of natural gas in southern California jumped in December to more than nine times the price of the U.S. benchmark futures for December, per Bloomberg’s estimates.

Early on Tuesday, the front-month futures price at the Henry Hub, the U.S. benchmark, was down by 0.57% at $2.441 per million British thermal units (MMBtu)—close to the lowest level in 25 months.

The high natural gas prices in California have led to warnings from utilities operating in the state that customers would receive a sticker shock with the gas utility bills.

Californians will see relief from high utility bills – with credits of $90 to $120 showing up on gas and electric bills as soon as next month, the governor said, and added, “We’re going to get to the bottom of this because Californians deserve to know what’s behind these exorbitant bills.”  

[ZH: Perhaps some self-reflection Mr. Newsom, as we detailed previously...]

Besides the recent storms that have crimped national supplies, California’s poor storage planning and aggressive climate action goals played a part in driving the prices skyward, Mike Umbro—an oil and gas developer in Kern County, about 150 miles north of Los Angeles—told The Epoch Times.

Utility companies use natural gas to create 43 percent of the electricity used by over 11 million customers in California, and the state only produces about 10 percent of what it needs, according to California Energy Commission.

“In the past 20 years, our in-state production was cut in half … We rely on other states around us to supply the difference of what we need,” Umbro said.

The Golden State and its neighbors are “feverishly working to decarbonize the electricity grid,” he said.

California is adding renewables while other states are shutting down coal power plants - both of these trends are increasing the usage of natural gas for power generation,” he said.

As a result, the state’s utility providers are paying “unprecedented” high prices this winter, he said.


To worsen matters, national supplies began flowing to Europe during the Ukraine conflict, leading to California’s storage levels dropping to the lowest in the country—41 percent—at the end of 2022, Umbro said.

But we are sure none of that matters...