A Retrospective Analysis of the Impact of Wind Power Generation on Residential Natural Gas Prices in the United States

Heightened concern over the environmental impact and price volatility of natural gas has led to an increased demand for renewable energy. Wind energy is one of the fastest-growing sources of electricity and is the United States’ top renewable energy source. As a substitute for natural gas, wind energy has a direct impact on the demand for natural gas and consequently, the price. Using data from the U.S. Energy Information Administration, the Bureau of Economic Analysis, and the U.S. NOAA, this paper determines a causal relationship between wind generation and natural gas prices because of the random component of weather. Employing an ordinary least squares regression with a fixed effect controlling for the month and state, I conclude that a one-percent increase in wind generation leads to a 1.80 percent drop in residential natural gas prices