Worrying Too Much, Or Not Enough, About Natural Gas?
Posted by Sonja Ebron
Unlike oil, whose production follows a bell curve, natural gas production tends to peak and drop off a cliff. Oil is liquid and therefore easy to import, while natural gas is mostly restricted to pipelines because it’s a gas. You don’t want to carry large volumes of gas over the shipping lanes unless you like fireworks a lot.
Five or ten years ago, something like 90% of all new power plants were being built to use natural gas as a fuel. Lots of industrial processes also switched to use natural gas directly. Over time, those changes lifted demand for natural gas while supply stayed flat, and now it’s expensive. Natural gas production in the lower 48 U.S. states has nearly peaked, so we get a lot from Canada and Mexico. But exporting countries increasingly need more of their own stuff, so we’ve either got to find a way to import from others or to dramatically decrease consumption soon.
Expensive Heat This Winter
Posted by Sonja Ebron
By all accounts, heating our homes will be very expensive this winter. The National Energy Assistance Directors Association (NEADA) projects large increases in heating costs for all fuels this coming season, which runs from October through March. NEADA is the group of state agencies that handles LIHEAP funding for low-income residents nationwide. A recent NEADA study (PDF) shows an average 15% increase in heating costs this winter, capping a 42% increase over the last four years. Those using heating oil fare the worst: they will pay 32% more this winter than last, capping a 116% increase over the last four years. As you might expect, all-electric homes fare best in winter, with only a 4% increase this year and a 22% increase over the last four years.
Wholesale natural gas prices have been crazy this year, as high as they were after Katrina and Rita knocked out gas production in the Gulf three years ago. After peaking around $14 per million BTU, they’ve settled at just under $12 as of this writing. That’s about a 25% rise in price over the last year. Residential natural gas rates have risen accordingly, ranging from $1.59 to $1.82 per therm for a 12-month contract in Georgia. blackEnergy has offered only variable rates for the last three months. We’re betting — guessing, really — that prices will settle before the winter sets in, and we can recommend a good 12-month lock-in rate for our customers. Either way, it’s going to be a tough winter for those using oil, propane or natural gas.
