Natural Gas Users May Feel Chill In Wallet
Posted November 30, 2004 5:09 a.m. EST
RALEIGH, N.C. — Experts are predicting a colder winter than normal, but the cost of staying warm is about to go way up. PSNC Energy estimates the latest natural gas price hike will add $15 onto the average monthly bill.
"The wholesale market is being impacted by a loss of production in the Gulf of Mexico as a result of Hurricane Ivan and also the expected onset of cold weather," said Angie Townsend, of PSNC Energy.
The problem for consumers is that it gets cold every winter.
"PSNC Energy does not earn a profit on gas it purchases for customers. The cost associated with purchasing that gas for customers is passed directly onto customers," Townsend said.
"Heading into the heating season, these are the highest prices we've ever seen," said Brian Archer, a natural gas trader.
With crude oil production at an all-time low in the United States and imports at record highs, most every energy market is bulging.
"That just bids up the price to get it over here and that, in turn, bids up heating oil, gas, electricity, coal -- it all just keeps on going," Archer said.
Archer said gas producers like Exxon, Mobil and BP are making a killing in the market. He predicts, unless the market changes, consumers will keep feeling the heat in their energy bills.
"Over the next three to six months, I think the possibility is there for even higher prices," he said.
Archer uses the old adage, "A rising tide lifts all ships," to explain how the United States' dependence on foreign oil drives up almost everyone's energy costs.
Natural gas prices are almost in the same spot they were four years ago. Customers are charged using a measurement called therms. PSNC's new rate is 1.27 per therm. At this same time last year, customers were paying $1.07. Two years ago, customers were paying 87 cents per therm.
However, in 2000 and 2001, the unit price of natural gas was $1.18. During that span, PSNC raised rates nine times and decreased them six times.