Natural Gas Prices Hit Highest Levels Ever California consumers face hefty heating bills

David Lazarus, Chronicle Staff Writer Tuesday, December 5, 2000

Icy temperatures in much of the country pushed natural gas prices to record highs yesterday, virtually guaranteeing that heating bills for most homes will surge this winter.

In Northern California, Pacific Gas and Electric Co. expects average heating bills this month to increase by about 50 percent to $77 from $50 last December.

Many PG&E customers already are feeling the pinch. November heating bills also contained hefty increases.

"As the economy expands and demand grows, supply just hasn't kept pace," said Staci Homrig, a spokeswoman for the utility.

She added that the number of complaints from customers about their bills had risen in recent weeks, "but not as much as we expected."

Natural gas prices have more than tripled from a year ago and jumped 47 percent last month alone.

Natural gas for January delivery rose 76 cents, or 11 percent, to $7.43 per million British thermal units -- the standard large-volume measurement -- on the New York Mercantile Exchange yesterday.

Earlier in the session, trading was halted when the price of natural gas jumped 19 percent to $7.95, the highest amount and the biggest one-day gain in 10 years of trading on the New York exchange.

Analysts said the surprisingly large gain in natural gas prices was fueled primarily by fears that a cold snap in the Midwest this week signaled an unusually chilly winter season for much of the nation.

Utilities led the buying as they attempted to stock up on natural gas and heating oil before demand goes even higher in coming weeks.

For California consumers, the spike in winter heating costs follows a summer of soaring electricity rates, a double whammy in energy charges. The shortages underline the state's precarious situation as it balances red-hot economic growth with limited fuel supplies.

"The higher natural gas prices should stimulate new production," said Claudia Chandler, assistant executive director of the California Energy Commission. "But these new sources won't come online for about two years."

Such a delay won't make things any easier for consumers like Jerarde Gutierrez, who lives with friends in Richmond. His landlord is worried that heating bills "are out of control," he said.

"I guess we've been using the heat freely, and now we'll have to get really good at building fires," Gutierrez said. "The landlord normally doesn't complain. I guess this time it must be bad."

Others are taking things in stride.

"I try to be energy efficient all of the time," said San Francisco resident Carol Gadas. "I rarely turn the heat on. I bundle up."

The U.S. Energy Department has warned that a long cold spell this winter could strain the nation's supplies of natural gas and heating oil. In October, natural gas stocks were 9 percent below the five-year average for this period.

America's supply of natural gas has been declining since the mid-1990s, when energy companies began cutting back on production as prices fell.

Now, these same producers are scrambling to boost output to take advantage of the current price increases.

Californians are especially vulnerable to turbulence in the natural gas market. Only about 15 percent of the state's natural gas consumption is met by in-state production.

The vast majority of California's natural gas supply -- about 60 percent -- comes from other states, mainly along the Rocky Mountains, and about 25 percent comes from Canada.

Exacerbating California's energy woes is the recent construction of a pipeline from the Rockies to the East Coast, allowing states where temperatures really get shivery to tap the West Coast's natural gas supply.

Temperatures in the U.S. Northeast, the largest heating oil market, are expected to be as much as 10 degrees below normal through the weekend.

PG&E's Homrig said the utility's customers were largely sheltered from day- to-day volatility in natural gas costs. PG&E buys only about 10 percent of its gas in the daily "spot" market, with most of the remainder secured at fixed prices in long-term contracts.

Homrig said the utility tried to stock up on natural gas as much as possible in the summer and fall, and that this helped limit increases in customers' bills.

While California's electricity market is now in the process of being deregulated, natural gas has been partly deregulated since the 1980s.

In PG&E's case, the utility can change customers' natural gas delivery charges, which remain relatively constant, only after receiving permission from the state Public Utilities Commission.

But PG&E can fiddle with the biggest component of customers' heating bills - - the cost of natural gas itself -- every month depending on how much it must pay to wholesalers.

Mike Florio, senior attorney for The Utility Reform Network in San Francisco, said it was probably unfair to lay blame for higher heating bills at PG&E's doorstep.

"We're so far down the road in terms of natural gas deregulation," he said, "the utility is only in the position of delivering the bad news."

http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2000/12/05/MN146299.DTL

-- Martin Thompson (mthom1927@aol.com), December 05, 2000

Answers

Per a previous post by Spider. Does anyone in California care about these posts.

-- Martin Thompson (mthom1927@aol.com), December 05, 2000.

Martin, I get the feeling that I'm only
posting for my ability to research. I read
most of your posts and find them important.
I will continue to look for Y2K stories
until about Feb. when I expect they will
have diminished drastically. I also want
to finish the graph for nuclear scrams to
the end of this year for comparison.

Thanks for your efforts Martin. (Homer?);-§

-- spider (spider0@usa.net), December 05, 2000.

Martin,

Trust that people far, far beyond California's borders are avidly reading your research. Me included, here in Ohio. You may not get many thank you's, so color this one covering a whole lotta research you've done and posted here...

R

Oh, that that kudo does not aply to just natural gas-related posts, far from it!

-- Red (cannot@nowhere.net), December 05, 2000.

Thanks Red,

I have been posting since January(wow, seems like a long time ago.)

Originally basically y2k stories, then the categories were expanded to include 'critical infrastructure' which is why I mainly post the energy and utility type articles. The forum has gradually expanded into other things such as the economy, world crisis articles and many other articles that one does not find in the mainstream media(CNN,fox and TV networks,etc)all for the good in my opinion.

After a while I start wondering if people are interested in these articles and start to question myself if I should keep this up. Then I get a couple of E-mails and responses from readers and it helps get me back in the groove so to speak. I guess I must be doing something right cause I cannot ever remember getting any negative responses.It also helps the there are other great posters like Rachel, Carl and Doris and Spider. If it was just me posting I probably would have quit long ago. There was a time there were only two posters to the board.

Again Thanks to all who have sent the great E-mails and by the way Spider I do not have any Beanfangs in family.:)

Martin

From the Great Northwest

-- Martin Thompson (mthom1927@aol.com), December 05, 2000.

I would like to also say that I really appreciate these continual posts and archive quite a few of them for future research. This is a critical resource that is very valuable.

-- robert waldrop (rmwj@soonernet.com), December 05, 2000.

Martin, don't stop the posts! Does Greenspun have a hit counter that allows you to see how many lurkers (such as myself) visit here every day to keep up with the news? The energy-related posts alone are worth their weight in gold. I regularly copy them to my own files and sometimes to other forums, altho other readers regularly beat me to the punch. Thanks again.

Cash

-- Cash (cash@andcarry.com), December 06, 2000.