Natural gas prices will likely lead to higher heating bills this winter

photo by: Mike Yoder

In this file photo from November 2009, Chad Hull, a service technician with Cloud Heating, makes a service inspection on a home gas furnace.

Heating a home in the Lawrence area this winter may be more costly than originally expected.

Black Hills Energy, which is one of two providers of natural gas to local consumers, originally expected the costs to remain flat this winter, according to an October news release.

But in November, colder-than-expected temperatures have led to increased gas consumption across the country, depleting stored inventory of the natural resource.

Monique Pope, a spokeswoman for Black Hills Energy, said Tuesday that a natural gas analyst for the company expected the prices to rise, settling between $4 to $5 per million British thermal units, or BTUs, the unit used for natural gas. Comparatively, gas prices were set at $2.70 in December 2017 and $3 in November 2018.

Pope said the analyst stressed that the December cost was not final and could change. Additionally, gas prices for January, February and March are not yet established.

The cost of gas will depend on the number of cold days that have consumers turning up the heat in their homes, Pope said.

“It’s all about the weather,” Pope said. “Mother Nature really calls all the shots.”

Atmos Energy, another energy provider for Lawrence consumers, did not provide an estimated price for December. Aaron Bishop, a spokesman for the company, did acknowledge that prices will be higher than in previous years.

“The latest weather forecasts are predicting colder than normal temperatures, which means natural gas consumption among our customers will naturally rise,” Bishop said. “When you factor in the latest uptick of natural gas prices on the market along with colder than normal weather across the nation, our customers can expect bills to be higher this winter.”

Alex Breitinger, business director for Paragon Investments based in Silver Lake, said natural gas prices have increased recently because of simple supply and demand. The price of natural gas has been relatively cheap in recent years because companies have been stockpiling more gas than consumers used.

But this year, it has reversed. He said the national average price of natural gas was trading at $4.74 on Wednesday.

“We had been riding high on lots of natural gas and cheap prices for some time, but then suddenly we got hit with this cold spell early on in the season,” he said. “It took us from being in a relative abundance of natural gas to suddenly being concerned about national supplies.”

Additionally, both Pope and Breitinger said colder temperatures in March and April forced consumers to use natural gas more frequently than normal, which also depleted the national inventory. April is typically the time of the year when companies begin stockpiling inventory, but the prolonged cold in early 2018 made that difficult.

Breitinger said there is not really a concern that the U.S. will run out of natural gas completely, but companies are now forced to pay attention to the issue.

“If we suddenly got forecasts for warm weather, that certainly could send the market tumbling the other way,” he said. “We haven’t done permanent damage to the supplies yet. So if we take the pressure off, that market could move back in the other direction.”

While the cost of natural gas is increasing, it is still much more affordable for consumers than it was a decade ago before the use of fracking, Breitinger said.

Hydraulic fracturing, or fracking, is a controversial method of injecting pressurized liquid into the earth to break up stone to release natural gas and oil. Opponents of the practice say it causes earthquakes.

Fracking has dropped natural gas prices from about an average of $8 down to $3, Breitinger said. In 2005, prior to using fracking, companies were worried they wouldn’t be able to find new ways to obtain natural gas, and it was trading at more than $15.

While natural gas is much cheaper than it used to be, its current cost is relatively high.

“We are, I would say in recent history, at extremely high prices right now,” Breitinger said.

Breitinger also sees the prices dropping again in the future. On the futures market, where companies purchase commodities now expecting to receive them later, natural gas is trading at lower rates. Gas for next winter is currently trading at $3 and for May at $2.80, he said.

“It’s this winter that we have the shortage,” he said. “We are not expecting a drastic change in the overall picture of natural gas supply and demand in the long term.”

Consumers can counteract the increasing costs by reducing the amount of energy they use. Black Hills Energy offers four tips on how to keep a comfortable home while using less energy:

• Adjust the in-home humidity level. A well-humidified house at 68 degrees is as comfortable as a dry house at 75 degrees.

• Make sure the fireplace damper, which seals off a fireplace, closes tightly when it’s not in use. Closing the damper could save 8 percent of a home’s heat.

• Use kitchen, bath and other ventilating fans only as needed. In one hour, these fans can blow away warm air in a house.

• Have a professional inspect the furnace annually. A professional can keep the furnace operating efficiently, as well as spot and correct any potential safety concerns.


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