Bruce Kauffmann The Cold Hard Facts About Your Monthly Gas Bill

thermostatIt’s January, which means we are in what the natural gas industry calls the “Winter Heating Season.”  Most natural gas customers call it the “I Can’t Believe My Monthly Gas Bill Season!”  Winter is when the thermostats go up, which means the amount of natural gas being used goes up, which means the monthly bill goes up.

“But wait!” you say. “I read that the price of energy, including natural gas, has been dropping like a stone. Won’t that make my monthly bill cheaper?”

The cold hard fact is: Your monthly natural gas bill may well be less than original forecasts, but probably not less than last year.

Here is why.  Much of the natural gas that customers will use this winter was actually purchased and put in storage this past summer when natural gas prices were higher than they are today.   Buying natural gas “off-season” – in the summer – is a long-standing tradition that is approved by those who regulate the natural gas industry.

So why buy gas off-season?

First, because it is traditionally plentiful in the summer, meaning buying it then ensures that there is plenty of natural gas when winter comes and gas demand skyrockets.

Second, being “off-season,” the summer months are traditionally a time when natural gas prices are lower.  It’s like planning a vacation. It’s cheaper to vacation in Jamaica in the summer because that’s “off-season” when the demand for Jamaican vacations is way down.  The same principle holds for natural gas. Since it’s used primarily as a heating fuel, demand for it is low when the weather is already warm. So prices are usually less.

This year has been different because the demand for all fuels, from natural gas to oil to coal, was higher than normal this past summer due to global competition for energy.  Since then, the global economy has slowed drastically which just as drastically has reduced energy demand.  That means lower prices now than in the summer.

Overall the Energy Information Agency forecasts natural gas prices slightly lower than last year, but so far the winter weather has been colder than last year, meaning more gas will be used for heating purposes. If that continues your monthly natural gas bill will be about the same.

The good news is that more and more natural gas utilities now are working with their customers to increase conservation and the efficiency of natural gas use.   By winterizing their homes, by lowering their thermostat, and by using the most efficient natural gas end-use appliances, natural gas customers can save energy, save money and reduce greenhouse gas emissions.

And that’s a fact that’s neither cold nor hard.

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