Winter Nears Natural Gas Prices Soar

November 6, 2005 – Vol.10 No.33

WINTER NEARS: NATURAL GAS PRICES SOAR.

According to Platts, the well-respected energy information service of The McGraw-Hill Companies, the average U.S. monthly natural-gas spot prices for November 2005 have risen to $12.42/MMBtu (million British Thermal Units), an astounding 68.6 percent higher than November 2004.

Platts says this is the highest price for natural gas since the wholesale natural gas market was deregulated in the mid 1980’s.

The blame, they say is an already tight supply/demand balance, complicated by damage from Hurricanes Katrina and Rita, along with shifting weather expectations and the volatile natural gas futures market. (Read this as to mean that speculators are helping to drive up the cost of natural gas.)

The high price of natural gas will not only affect direct natural gas consumption, but the cost of electricity where power is generated from natural gas-fueled power plants.

If natural gas users are businesses they can always pass on the rate increase to their customers.

But, unfortunately natural gas users who are homeowners have little choice but to pay the bill and find ways to reduce consumption - which is not always easy

Certain investments can be made - a new, more efficient heating system, an on-demand hot water heater (make hot water only when you need it), a setback thermostat (let computer automation drop the temperature in your house when you’re not there), or add more insulation and weather stripping (tighten up those homes). However, not everyone has the financial resources to make those investments.

As much as it’s difficult to change patterns of behavior they are the simplest, fastest, most cost-effective way to save money on an energy bill. Changes in behavior are free, but the key word is diligent.

--- Train yourself to set back the thermostat when you’re gone for long periods of time or overnight while you’re asleep. (If you can’t remember to do this put a sign on the outside door, your bedroom door or bathroom mirror.)

--- If you have any south facing windows, or have a particularly sunny side of the house, let the sun shine in. Even when you’re gone sunlight streaming in on the coldest of winter days can heat up an entire room, furnishings and all. The furnace or boiler will run whether you’re there or not. The sun-warmed room may keep the heating system off until it’s really needed.

--- If the curtains or other window treatments have any insulating value, close them at night - keep the heat you’re paying for inside.

--- Cook meals at home. Not only is it always cheaper to make your own meals, but the range will help heat the house. (Don’t ever use a range to HEAT a house.)

--- Most water heaters have a VACATION setting on the thermostat. Going away for a few days? Set it. There’s no sense heating water you won’t use.

--- Consider heat and electricity as part of a total energy bill that includes transportation. Even though gasoline prices have dropped, that shouldn’t be encouragement to go back to driving more. Drive more slowly. Accelerate at a leisurely pace. Drive less.

Customers pay for natural gas after they’ve used it. (Unlike gasoline, where you buy it beforehand.) So the time to make changes is now, before the next bill arrives in the mail.

Visit Platts at http://www.platts.com/ .