Winter is nearly in the air. At the American Gas Association, that means it’s time for another winter heating season outlook for customer heating bills. This year the fundamentals are positioned such that we expect customers will pay less on their heating bills than last year.

Amid abundant supplies, near normal temperatures, and a moderate increase in natural gas demand, we anticipate residential natural gas bills to be the second-lowest we’ve seen during the past decade. AGA’s Policy Analysis group estimates a 5 to 7 percent decrease in bills this winter, meaning good news for homes and businesses.

There are three principal factors at play, two of which are subject to varying amounts of uncertainty.

The first, of course, is weather. AGA’s outlook is based on a National Weather Service forecast, which anticipates a warmer-than-normal winter. Its forecast has 2 percent fewer heating degree days (warmer) this winter than the 1980-2010 average. This, in turn, translates to approximately three percent less natural gas demand for home heating loads.

Cooler weather in the southern half of the US would be balanced by warmer-than-average temperatures in the North. However, since the northern states tend to be higher consumers of natural gas, the net effect would likely be a decline in residential gas consumption.

Weather Map

NWS forecasts two percent fewer heating degree days (warmer temperatures) this winter.

Weather represents the biggest area of uncertainty in this outlook. A colder winter will boost heating demand and the amount of gas consumed by households. If temperatures are warmer than expected, bills might be even lower.

Meanwhile, the price of natural gas remains low and is expected to remain so this winter. The Energy Information Administration’s Short-term Energy Outlook (September 2015) projects lower residential natural gas prices compared with 2014. A comparison of November through March for this winter compared with last shows a 5 percent decline in delivered prices.

Price outlooks always carry a degree of uncertainty as well. Commodity prices could rise or fall in the face of cold or warm weather events or supply disruptions. However, as we’ve seen during the past few winter seasons, weather-induced price movements have been relatively muted, acting more as short-term signals to suppliers.

With robust supplies and infrastructure in place, there’s every reason to expect the relatively low and stable pricing regime to continue, even amid short-term fluctuations in commodity prices. Furthermore, natural gas utilities maintain supply portfolios that include both physical and financial positions in order to manage variance in the market. This adds further price and supply stability during the winter months.

Finally, our third factor: average household gas usage, which continues to decline. Based on EIA data on residential gas use and number of customers, and after adjusting for year-to-year changes in temperatures, a steady decades-long decrease in household natural gas use emerges. Tighter building shells, higher appliance efficiency, and utility investments into efficiency have all contributed to cutting average household gas use by half since 1970, which in turn mitigates customer exposure when weather or price dynamics conspire to push customer bills up.

Residential use

What are some of the market fundamentals that underpin AGA’s Outlook?

First is supply. United States natural gas production is on track for another record year in 2015. Daily dry gas volumes in the lower-48 have averaged 71.6 billion cubic feet (Bcf) per day this year, which is a 5 percent increase from 2014, which itself was a record year.


Demand hasn’t let up either and is poised to set another record as well. Lower-48 natural gas consumption has averaged 76.3 Bcf per day year to date in 2015, an increase of nearly 4 percent on the backs of stronger natural gas power generation and exports to Mexico. Note that each year from 2010 through 2014 were all record years for demand. We might be adding 2015 to the list soon.

Natural gas in underground storage is in as strong a position as it’s ever been. At more than 3.5 Tcf of working gas in storage currently, there are typically about six weeks remaining during the injection season; that is, when net volumes into storage are positive. If volumes directed into storage remain at a rate consistent with the past five-year average—recognizing that this year’s injections into storage have actually exceeded the average rate—then winter inventories could surpass 4 Tcf for the first time ever.

The resulting balance between supply, demand, and storage has been a relatively low and stable natural gas price. The last time natural gas at Henry Hub was priced above three dollars was May 20, 2015, and most of the year has been in the $2.00-2.75 range. This speaks to the robustness of the supply and infrastructure in place despite record levels of demand so far in 2015 as well as the strength of production volumes.


Headed into the winter, supplies are robust and prices are moderate even with record levels of demand. Given these market fundamentals, consumer bills are expected to moderate or even decline this winter. Like I said: good news for households and businesses across the country.

Natural gas continues to be the lowest-cost energy option for home heating. Affordable customer bills is just one reason natural gas provides homeowners with value. As companies and the country continues to modernize the natural gas infrastructure base and connect homes and businesses to this system, new opportunities arise to lower consumer bills, improve energy efficiency, and achieve low-cost emissions reductions by leveraging this existing infrastructure and the nation’s abundant natural gas resources.

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Chris McGill Natural Gas Market Indicators: September 29, 2015

Analysts often point to demand pressures as the next ticket to average price increases for natural gas at points such as Henry Hub or that even LNG imports will spur price advances. OK, that may be so, but here we are in a year, once again, where actual consumption has jumped and is headed to another record, primarily on the back of natural gas to power generation. Yet, prices have not increased.

Visit this link to download the full Natural Gas Market Indicators report. Topics covered in this week’s report include: Reported Prices, Weather, Working Gas in Underground Storage, Natural Gas Production, Shale Gas, Rig Counts, Pipeline Imports and Exports, and LNG Markets.

Please direct questions and comments to Chris McGill at or Richard Meyer at

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Jennifer O'Shea Natural Gas Utilities Recognized for Residential Customer Satisfaction

J.D. Power’s recently released the 2015 Gas Utility Residential Customer Satisfaction StudySM, which shows that customer satisfaction with residential gas utilities continues to increase. According to J.D. Power, in 2015, overall customer satisfaction with residential gas utilities has increased by 27 points to 671 from 644 in 2014, “continuing an upward trend to an unprecedented level in the study’s history.”

The study, which measures residential customer satisfaction with gas utility companies across six factors (in order of importance): billing and payment; price; corporate citizenship; communications; customer service; and field service, ranks large (serving 400,000 or more residential customers) and midsize (serving between 125,000 and 399,000 residential customers) utility companies in four geographic regions: East, Midwest, South and West. The study is based on more than 66,000 responses from residential customers of 83 large and midsize gas utilities across the continental United States and satisfaction is calculated on a 1,000-point scale.

The following AGA members ranked highest in customer satisfaction in their respective region: New Jersey Natural Gas (East Large), Columbia Gas of Pennsylvania and Elizabethtown Gas in a tie (East Midsize), MidAmerican Energy (Midwest Large), Alliant Energy (Midwest Midsize), Oklahoma Natural Gas (South Large), TECO Peoples Gas (South Midsize), NW Natural (West Large), and Cascade Natural Gas (West Midsize).

AGA members deliver clean, efficient and affordable natural gas to more than 177 million Americans and are a true partner in the communities they serve. Many utilities have served their customers for more than 100 years.

Congratulations to all the AGA members who were recognized by J.D. Power.

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Richard Meyer Natural Gas Market Indicators: September 11, 2015

Many years ago, the month of September was the time when the natural gas industry and the market began taking stock of supplies in preparation for price increases that were certain to occur. Companies would set expectations for the winter, where the rush of demand would push prices upwards. This preparation still exists today, as do price movements, but conditions have changed substantially. The expected supply concerns of even a decade ago have transitioned to a more modern recognition of supply diversity and abundance. This year a strong supply base has continued to outpace even record levels of demand, which has been driven by record levels of natural gas to power generation, itself up 16 percent. The result has been a near record push of volumes into storage, which might hit the 4 Tcf mark before the winter turnaround. The past few years the U.S. has entered the winter season with a robust supply outlook. Right now 2015 appears poised to follow suit.

Visit this link to download the full Natural Gas Market Indicators report. Topics covered in this week’s report include: Reported Prices, Weather, Working Gas in Underground Storage, Natural Gas Production, Shale Gas, Rig Counts, Pipeline Imports and Exports, and LNG Markets.

Please direct questions and comments to Chris McGill at or Richard Meyer at

Posted in Natural Gas, Natural Gas Market Indicators, supply | Leave a comment