Nov. 22–Mother Nature may deliver a lump of coal for Christmas for consumers who heat their homes with natural gas.
Soaring natural-gas prices coupled with a frosty start to the heating season mean bigger bills are likely for consumers who haven’t locked in a price.
For most of 2018, natural gas has run below $3 per 1,000 cubic feet. But in recent weeks, that price has spiked to above $4 and is nearly $5 this week. That’s just the cost of producing the gas itself.
Energy companies and utilities then charge consumers to bring the gas to their home.
Of course, many consumers have the option of locking in a price for a given period with a natural-gas provider.
A check of energychoice.ohio.gov, a site kept by the Public Utilities Commission of Ohio, shows several companies offering fixed rates below the current Columbia Gas price, but a 2016 study found that most Columbia Gas of Ohio consumers who went that route ended up paying more in the long run than the Columbia price that fluctuates month to month.
Choosing a fixed contract does give consumers peace of mind, however.
“Options are there for consumers,” said Matt Schilling, a PUCO spokesman. “We just want them to make an educated (choice).”
Because it has been colder than normal, consumers are using more gas, and that contributes to what figure to be higher bills for now.
“What we’ve seen is a moderately cold start to the winter, about 8 percent colder than normal,” said Mike Anderson, director of supply development for NiSource, the parent of Columbia Gas of Ohio. “A lot of people are reacting to that cold weather right now.”
The federal government’s Energy Information Administration had forecast in October a modest increase in prices this winter, with the average family paying about $600 this winter, about $30 more than last winter. That’s an increase of 5 percent.
Since that forecast, though, gas prices have jumped significantly.
Going into heating season, supplies of gas in storage were at their lowest level since 2005, according to the federal government. Demand has been strong, with utilities using more gas to generate electricity and more gas being exported. Plus, hot weather into October kept air conditioners humming longer than normal.
“We were running air conditioning on natural gas. All of a sudden, boom, we went from air conditioning demand to furnace demand,” said Stephen Schork, who tracks energy prices as the editor of the Pennsylvania-based Schork Report. “We didn’t get a shoulder month (where temperatures are moderate). That didn’t happen this year.”
Even though natural-gas production continues to grow, so does demand, he said.
“Demand is a lot stronger than what the market wants us to believe,” he said.
How much more consumers will pay is hard to say. Historically, natural-gas prices tend to peak in November and December and then level off or go down the rest of winter. But if it remains cold, the higher prices could be here to stay.
“It’s all dependent on Mother Nature,” Schork said.
A typical residential Columbia Gas of Ohio customer will pay an estimated bill of $58.94 for November, $3.91 higher than the same period last year, according to the company.
Natural-gas prices have jumped in prior years as well only to settle down within a couple of months. Last January, Columbia Gas’ rate jumped and then quickly fell.
“The price of gas is going to affected by the weather,” Anderson said.
The good news is that there is plenty of supply available, helped by strong production coming from the Marcellus and Utica shales in Ohio and elsewhere, he said.
“We’re not concerned about the reliability for this winter,” he said. “There is plenty of supply.”
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