Winter months to bring chilling bills: Over the past five years natural gas prices have been rising slowly; Katrina and Rita won’t make that any better
September 29, 2005
Along with high prices at the gas pump, winter energy bills are also predicted to hit pocketbooks hard, all of which means a busy fall for local wood suppliers.
Southwest Gas anticipates customers will have higher natural gas bills this winter. Dennis Redmond, the company’s division vice president, said that Southwest Gas estimates an average January 2006 bill for Truckee customers, based on 125 therms, to be $268, compared to $214.72 in January 2005, a nearly 25 percent increase.
Increases for South Lake Tahoe and Stateline were not available. The Tahoe Daily Tribune will print the averages as soon as the numbers are available.
Southwest Gas gets most of its natural gas from refineries in Colorado’s Rocky Mountains, not from the Gulf, so Katrina and Rita were not a direct impact, according to Cynthia Mecina, a spokeswoman for Southwest Gas. Now the issue is sharing resources with other areas of the country, she said.
Over the past five years natural gas production has not met demand, and prices have been rising slowly but constantly, Mecina said. Now, with eight Gulf refineries momentarily closed or completely destroyed, the nation is turning to suppliers that are already behind the game, she said
Propane suppliers are facing the same problem, which means propane users will see increases as well.
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“Other refineries are having to make up for excess demand, which creates a fuel shortage for all types of petroleum products,” said Greg Miller, Suburban Propane manager based in Tahoe City.
Meanwhile, the spike in fossil fuel costs is translating into more business for Brian Rye, owner of Bushwhackers Firewood in Tahoe Vista. Sales of firewood in the area have increased significantly in previous weeks, he said.
“I would guess that we are going to sell about 25 percent more this year than last year,” Rye said. “A large amount of customers are indicating that they are stocking up in anticipation for increasing gas prices. There is definitely some fear in the air.”
Rye also said that he anticipates selling out of wood by the end of October, a full month before usual.
Overall, California is expecting a 40 percent average increase in natural gas costs, while other states, particularly those feeding off Gulf oil supplies, will be shelling out nearly 70 percent more, said Susanne Garfield, spokeswoman for the California Energy Commission.
“California is actually in very good shape as far as the amount of natural gas that we can store, so there is a bit of a reserve that helps to buffer the cost,” Garfield said.
But since natural gas is a publicly traded commodity, the state will be paying a high price for the large remainder that is needed, she said.
To avoid purchasing natural gas during the winter crunch, Redmond said Southwest Gas strategy was to purchase nearly one-third of its expected winter demand in California with lower fixed-price contracts.
“However, the remainder of natural gas needed this winter to meet demand must be acquired at current market levels, which are relatively higher across the country,” Redmond said. “And this will ultimately cause customer bills to be higher.”
The price tag for propane has already jumped – more than 40 cents per gallon in the last three weeks – a number that Suburban Propane’s Miller said is “completely unprecedented” for the U.S. market.
Jane Costa, a customer relations representative for AmeriGas in Truckee, said that local propane companies have not pinned down an exact percentage increase, but are anticipating losses as they compete to maintain customers.
“We are so competitive that we take losses in years like this because customers have the ability to shop the competition in Truckee for propane; you don’t have that option with natural gas,” she said. “With gas prices so high, consumers are fickle and willing to switch providers for the lowest bidder.”
From wells to warmth, how natural gas gets to consumers:
Natural gas is a naturally occurring hydrocarbon that consists mostly of methane and is found in underground formations of porous rock. Wells are drilled into those rocks and pipes are used to bring natural gas to the surface.
Gathering lines transport the gas to a processing facility where impurities are removed. The clean gas is then sent through 280,000 miles of steel pipe from the region in which it was produced to local natural gas facilities.
Local distribution companies measure the gas and add an odor to help customers smell even small quantities of gas. The local gas company then uses distribution pipes to bring gas to homes and businesses.
– Natural Gas Council