Thursday, October 06, 2005

Natural Gas prices on the rise

The basic economics of supply and demand are at work with natural gas prices, too...

Energy analysts estimate California consumers will pay "a near all-time high, nearly $16 billion in commodity costs," said Joe Desmond, chairman of the California Energy Commission.

For residential homes, utilities have warned that means a jump of between 45 percent and 70 percent over last year's monthly bills.

Gas prices tend to drop in the spring, but analysts are "seeing sustained high prices" given the damage caused by the twin hurricanes, Desmond said.

The hurricanes knocked out 80 percent of the daily production in the Gulf Coast, which usually produces about one-fourth of the nation's natural gas supply. California imports about 87 percent of its natural gas, although most is from Canada, the Rocky Mountain region and the Southwest.

Before the hurricanes, Pacific Gas and Electric Co. analysts were predicting a 20 percent increase in natural gas prices, said Jennifer Ramp, a spokeswoman for the largest Northern California utility. That estimate now is between 40 percent and 50 percent.

As the weather cools, "gas bills rise automatically because the amount of usage triples," Ramp said.

The combination of higher prices and use means an average PG&E residential customer will see a 71 percent increase in October's monthly gas bill, company officials said last week. A typical natural gas bill will average $42.10, officials said.

If only there were some kind of way to add to California's natural gas supplies...