The ongoing blast of icy, winter weather across much of North America is pushing natural gas prices up to their highest level in almost four years.

Although they softened somewhat on Monday, natural gas futures for February delivery rose as high as $5.56 per British thermal unit over the weekend, the highest level seen since early 2010.

The price of gas at Henry Hub has risen more than 30 per cent over the past two weeks and it’s more than 50 per cent above where it was this time last year.

Low inventories

Natural gas is the most widely-used form of heating on the continent, heating about half of all homes. The second-most common — electricity — is also vulnerable to the price of natural gas because many power plants that generate electricity are gas-powered.

"This winter looked to be slightly colder than normal, but no one was really screaming for this kind of cold weather,” said Aaron Calder, a market analyst at Gelber & Associates.

All the cold air is resulting in a draw-down of supplies of gas in storage. They’re down 20 per cent from where they were this time  a year ago, the U.S. Department of Energy said last week.

At the same time, drillers are struggling to produce enough to keep up with the demand for new gas.

"We've got record demand, record withdrawals from storage, and short-term production is threatened," energy analyst Stephen Schork told AP recently. "It's a dangerous market right now."

Commodity Weather Group said in a report last week it’s expecting below seasonal cold weather to persist  for several more weeks and breaks in that forecast will be "weaker and briefer, extending the duration of colder weather" in late January and early February.

The supply situation has been exacerbated by the fact that in the past, much of gas production was in the Gulf of Mexico. There, weather only plays a role during the Atlantic hurricane season in the summer and fall.

New sources of gas are on the mainland and they’re vulnerable to freezing, ice and snow. Wells that are not designed for such extreme conditions can freeze, halting production.

"Now the threat to production is when demand is at its highest," Schork says.

When the Calvert Cliffs Nuclear Station in Maryland shut down last week because of an electrical problem brought on by snow and ice, power generators across the East Coast scrambled to replace the lost power by cranking up natural gas-fired plants.

That sent natural gas prices for immediate delivery, known as the spot price, to a record $120 per 1,000 cubic feet in some markets on the East Coast. To put that in perspective, that's equivalent to oil at more than $700 per barrel.

With files from The Associated Press and Reuters