MARY LOUISE KELLY, HOST:
Compared to this time last year, we're all paying a lot more to use all sorts of energy right now, whether it is gas for our cars or heating fuel for our homes. That is part of a global trend.
And NPR's Camila Domonoske is here to explain why. Hey, Camila.
CAMILA DOMONOSKE, BYLINE: Hi, Mary Louise.
KELLY: So I'm struck by - I mean, this is something that affects all of us. You know, crude oil, prices per barrel - that can be hard to get your head around. But your heating bill is right there, staring at you from the kitchen table. How are things looking?
DOMONOSKE: Yeah. Overall, prices are up, like you said. It's not the worst-case scenario that people were bracing for just a few months ago, and it's not nearly as bad as the crisis that Europe has been seeing, but, yeah, compared to last year, if you look at gas prices, you're up about 40%. Natural gas prices are up more than 60%. And natural gas, I should note - it's used by about half the country for heating. But even more people have it feed into their electricity bill. So yeah, this is definitely something people can feel.
KELLY: And why? Why are prices so high?
DOMONOSKE: A lot of it is the same story that we've seen unfold across a bunch of different parts of the economy over the last two years. During the early days of the pandemic, demand disappeared really quickly. People stopped driving and flying. Factories shut down and didn't need power. So supplies went down. But now that demand is coming back, supply is struggling to keep up.
In fact, if you look at, say, oil prices in particular, they've tracked so closely to the pandemic headlines that you can basically use them as a gauge for public sentiment. If people are optimistic that the pandemic's ending, oil prices go up. Then you get delta or omicron news, and they go back down.
There are some other factors. Like in the oil industry, investors are really pushing producers to make less, keep supplies down so prices stay high to boost profits. It's really different than the days of drill, baby, drill. That's having an effect, too.
KELLY: Well, let's just talk about what this means for all of us, all of us ordinary people staring, as I said, at this heating bill on our table because it is winter, although it hasn't actually felt like winter here in D.C. (laughter). We'll hold out for January on that front. But what is happening with home heating costs?
DOMONOSKE: Yeah. So those costs are also up. And it doesn't really matter what your source of fuel is. They're all up to some degree. But I'll also note when it comes to heating fuels, talking about the weather like that is not just small talk. I mean, here in Virginia, it was 65 degrees this week. That affects prices. It reduces demand. And natural gas prices, which had been skyrocketing just a few months ago - they actually came back down recently because so much of the country had mild weather. But that could still change. If there's a cold snap, prices will go in the other direction. And bills will go way back up again.
KELLY: And what about gas prices? What are you watching for?
DOMONOSKE: Yeah. So they are down a bit from their recent highs, still up about 40% from where they were last year. As for what happens next, the forecasts are all over the map, from a fall very shortly to a sharp rise. I mean, so much of this - it goes back to the pandemic and all the uncertainty around it. Energy prices have always been volatile, and now that's just more true than ever.
KELLY: NPR's Camila Domonoske, thanks. Happy New Year.
DOMONOSKE: Thanks. You, too, Mary Louise.
(SOUNDBITE OF JUSTICE'S "VALENTINE") Transcript provided by NPR, Copyright NPR.
