Here's how the Russia-Ukraine conflict is rippling into Michigan's energy markets
Russia’s attack on Ukraine has caused major disruptions in energy markets across the world and is rippling into Michigan.
In its 2021-2022 Winter Energy Appraisal, the Michigan Public Service Commission (MPSC) projected that total natural gas use in Michigan would decrease 4% this winter. 77% of Michigan households use natural gas to heat their homes.
However, the conflict in Ukraine has drastically impacted Europe’s natural gas market, which heavily relies on Russia. And while the U.S. produces most of its own natural gas, states like Michigan can still feel the effects of changes in the global system.
“Increased exports, as we're seeing globally with liquefied natural gas or LNG," said Dan Scripps, Chair of the Michigan Public Service Commission, "that obviously puts some pressure less on the energy sector and more on the manufacturing sector in Michigan.”
Scripps also says gasoline prices have risen 30 cents per gallon over the last month in Michigan due to the conflict. The MPSC also projected an increase in gas prices in its Winter Energy Appraisal but could not have predicted how a Russian invasion would impact gas prices.
“And that's where I think folks have seen the biggest impact. And that's probably where we underestimated the likelihood of conflict and the impact of the conflict," said Scripps.
Only 8-9% of Michiganders use propane to heat their homes, most of which is in the northern region. Farmers also use propane to dry harvested crops like corn.
But Scripps says Michigan imports its propane from Canada, so those prices are not expected to be affected by the conflict in Europe.
The overall cost of propane in Michigan has been climbing up in recent months. According to the U.S. Energy Information Administration, the cost of one gallon of propane in Michigan is $2.56 per gallon as of February 28.
In February 2021, the cost of one gallon of propane in Michigan was $2 per gallon.
Scripps also mentioned that "Canada has built some export terminals on the west coast. And we've seen increases in propane costs as a result."