California Gas Heating Bills to Rise Substantially, Industry Group Says Source: Knight Ridder/Tribune Business News Publication date: 2000-11-21

Nov. 21--They called it back in September and it's holding true: Californians will see their natural-gas heating bills jump by about 50 percent this winter because of tight supplies nationwide. Natural-gas suppliers have dramatically increased drilling with the first major spike in prices seen in several years, but there's no prospect that those supplies will be hitting the market soon to cut home-heating costs, said Daphne Magnuson, spokeswoman for the American Gas Association.

"There are hundreds of rigs going all-out full bore," she said. "Nevertheless, it takes awhile before the supplies roll into the marketplace. I couldn't say when that might happen."

The natural-gas industry remains confident there will be enough supplies to heat homes this winter.

"We're absolutely sticking to that," Magnuson said. "We're more than confident we'll have enough to meet all our customers' needs, but it's going to cost them more."

Last week, the association reported that gas inventories had actually fallen 6 billion cubic feet … a small fraction of the nation's total gas storage … because of a cold snap in the Midwest. Prices jumped on that report from as low as $4.49 per British thermal unit in October to well over $6.

Natural-gas futures Monday closed at $6.25.

Gas prices actually are up about double that of last winter, which was a relatively warm winter. But gas prices make up only about half of a PG&E consumer's bill because the rest amounts to standing delivery charges.

"I don't know if producers have cranked up supplies, but in terms of prices, they haven't receded at all," PG&E spokeswoman Staci Homrig said.

Pacific Gas and Electric Co. estimates that an average natural-gas bill of $50 will increase to about $75.

Price-increase warnings apparently aren't pushing consumers to boost their home insulation.

Checks with several area insulation contractors turned up that installations in existing homes … typically low volume … remains slow.

"Usually any time you have a hot or cold spell, you get some people calling," said Jim Denning, branch manager for Century Insulation, French Camp. "But it's no more than usual."

Part of the tight natural-gas market is attributed to the nation's strong economy, which has thriving businesses expanding and using more natural gas.

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-- Martin Thompson (mthom1927@aol.com), November 22, 2000