Why home heating costs are rising as winter approaches

Yahoo Finance's Rick Newman joins the Live show to discuss U.S. gas prices, rising electric bills, the expectations for winter, and the outlook for natural gas.

Video transcript

- We're also continuing to track gas prices. Steady below $4 a gallon right now. Experts are warning of rising electric bills, though, on the horizon. For more on this, let's bring in Yahoo Finance's Rick Newman joining us now to discuss. OK. So what exactly should we be keeping tabs on on the horizon when it comes to some of the energy bills here?

RICK NEWMAN: Natural gas prices. So gasoline prices get all the attention because everybody sees the price advertised everywhere. Does anybody ever see the price of natural gas advertised anywhere? I mean, I have actually looked deep in the fine print of my utility bill to see why is it so high.

But natural gas prices are going up. They are about 75% higher than they were this time a year ago. They're more than twice as high as the levels of two years ago. And this matters because natural gas is the top fuel that provides electricity, utilities burn for electricity. Now, there are renewables, coal, nuclear, and other things like that. But natural gas is about 40% of the electricity production here in the United States. A lot of people use it for heat as well in the winter.

And prices are just high. Prices were high before Russia invaded Ukraine on February 24. And then the energy war that has come along with the military war in Ukraine has pushed global prices higher. So we're feeling that here. And, unfortunately, I think utility bills here in the United States are going to be higher than last year. And they were high last year.

- Rick, that's why I love when you come on because you also cover the Biden administration very closely and cover the political scene closely. Is this rise in natural gas reflective of the administration's stance on energy policy in the country?

RICK NEWMAN: A lot of people want to say yes, especially Biden critics. But it's not. Not really. I mean, we have a lot of energy here in the United States, obviously. And natural gas is different from oil. It's a lot harder to transport. So natural gas is more likely to stay here at home. But we had really low prices, just as we did for oil here in the United States, for 7, 8, 9, 10 years leading up to the wipeout in 2020. And producers tightened up.

I mean, a lot of them lost money or their margins were terrible. And their investors said, we need a better return on our money. So just as with oil, I mean, producers have tightened up because they want to make money. And now the global market has tightened up. And so we've got two things going on here. There's really not much Biden administration policy on natural gas. We've talked about Joe Manchin, the Senator from West Virginia. He's trying to get permitting reform.

There are a lot of natural gas pipelines that are tied up because they cannot get the permits to go through communities or states and things like that. That's not really a federal problem. That is states and communities that are just saying, I don't want a pipeline running through my backyard. It's a not in my backyard problem. So there are a lot of reasons why we don't have all the natural gas getting easily to the places that need it. There's not a simple answer to that, unfortunately.

- If I give you my bill, Rick, can you dig through it and find me savings?

RICK NEWMAN: I don't think so because--

- I'll buy you lunch.

RICK NEWMAN: --I haven't been able to do it on my bill. I mean, for what it's worth, Con Edison has four different things you have to look at. There's the delivery rate, which is different from the transportation rate. And then you have to do that for gas and electric. I mean, it's like deliberately confusing so we don't figure out whose fault this is.

- Right. It's literally a conversation--

RICK NEWMAN: It's maddening. It's really maddening.

- --with our next door neighbor to ask if-- they asked if ours were high too. And we were just sitting there like, yeah, [INTERPOSING VOICES]

RICK NEWMAN: The answer's yes. And then you say, why? And everyone's, like, well, it's somebody's fault, but I can't figure out whose.

- We'll take this offline. I need some help. Rick Newman, always good to see you.