Price and volatility trifecta: Weather, tariffs, and executive orders

This month, it has been challenging to pinpoint what has impacted natural gas the most—but not in the way you may think. There have been so many earth-shaking impacts that it is difficult to single out just one. The shifting sands of natural gas (and energy markets as a whole) are more unpredictable than ever. Bloomberg News recently reported that the 60-day volatility of the prompt March NYMEX natural gas contract has reached unprecedented levels. While many factors supported this price volatility, the trifecta of weather, tariffs, and executive orders over the past month and a half have been key drivers.

Weather – Two and a half weeks of consistently cold weather, including Winter Storm Enzo in January, drove demand. The impact on natural gas usage was extreme, with residential and commercial heating demand averaging 50 Bcf/day for January and reaching a single-day high of 63.3 Bcf on 1/21. Natural gas storage was hit hard with a 976 Bcf withdrawal over a four-week stretch. Natural gas futures prices are always a bet on winter weather. However, following the mild winters in 2022/2023 and 2023/2024, we were reintroduced to a cold January and cooler February in 2025. A real winter, combined with the other two legs of the volatility trifecta, have resulted in a rude wakeup call.  

As seen in the chart below, the 12-month forward NYMEX strip (March 2025-Februry 2026) is currently trading at $4.16/MMBtu, a wallet-popping $1.89 higher than the 2024 NYMEX Last Day Settlement (LDS) average of $2.27/MMBtu.  

Tariffs – Over a month before President Trump took office, he vowed to enact a 25% tariff on all imports into the U.S. from Canada and Mexico. He eventually agreed to pause the tariff for a month to allow the two nations to address Trump’s border concerns. It is important to note that Canada exported an average of ~6 Bcf per day of natural gas and ~6.6 million barrels of crude oil to the U.S. in 2024. The tariff was initially paused until February 1, then reduced to 10% for energy-related products, and paused again until March 1. While the ultimate impact to U.S. consumers isn’t fully known, delaying the implementation of the tariff and reducing it to 10% mitigated the immediate supply and price risk to gas markets. Should the tariff be implemented, west coast markets from Washington to northern California would be the most susceptible. Some upper Midwest markets that rely on supplies during extreme weather would also be affected, as well as the upper Northeast, which has few options during the winter.  

Executive orders – President Trump signed an unprecedented number of executive orders in the first month of his second term, with several impacting the overall short and long-term direction of energy in the U.S. Short term, the most influential was “Executive Order 14156: Declaring a National Energy Emergency.” This order allows executive departments and agencies, including but not limited to the Department of Energy (DOE) and the Environmental Protection Agency (EPA), to issue emergency permitting under the Clean Water Act and the Endangered Species Act. Both acts included provisions that have significantly delayed or even cancelled many energy-related infrastructure projects in the past three administrations. This order specifically calls out these shortened timeline benefits for specific energy sources of natural gas, coal, and crude oil but notably leaves out both solar and wind.  

“Executive Order 14154: Unleashing American Energy” revoked or amended 12 executive orders of the Biden administration and one executive order from the Carter administration. It orders all relevant agency heads to eliminate delays in their respective permitting processes, streamline the judicial review of the National Environmental Policy Act (NEPA), and eliminate any consideration beyond the relevant legislated requirements for environmental considerations passed by Congress. It also removed the pause on LNG export permit applications from President Biden. The export capacity is already hitting record highs, and the resumption of permits is expected to add another 2.5 Bcf per day of export capacity this year.

Until weather patterns become more predictable, proposed tariffs are implemented, and executive orders are ruled upon, expect more of what we have seen over the past few years in energy - lots of volatility in the gas market.