Natural gas prices head up

From The Times of Northwest Indiana
September 6, 2006

Natural gas prices for utility customers are again headed up, but predictions are they will be less severe than last year, when two Gulf Coast hurricanes blew prices up.

NIPSCO on Tuesday announced the natural gas supply portion of a customer’s bill will increase 15.5 percent in September. A typical customer using 50 therms of natural gas can expect an increase of $7.22 from his or her August bill.

Nicor customers in Illinois will see an increase of about 18 percent in their September bills.

NIPSCO has 712,000 natural gas customers in northern Indiana, and Nicor has more than 2 million customers in Illinois.

Some very hot weeks this summer drove up consumption of natural gas by gas-fired electric generation plants, according to Jim Deering, president of Nordic Energy Services LLC, of Willowbrook, Ill. That drove up demand and caused some gas in storage to be withdrawn, driving up prices.

Still, last year at this time, utility customers were paying almost double what they are now for natural gas.

“Historically, it’s still pretty high, but it’s significantly below where it was last year,” Deering said.

Nordic provides energy management services for more than 500 industrial and commercial facilities with annual energy requirements of $150 million. It is an approved supplier for Nicor Customer Select and NIPSCO Choice programs.

Prices for utility customers spiked in September and October of last year, when Hurricanes Katrina and Ritaknocked out a good portion of natural gas production in the Gulf of Mexico. Prices fell through the winter and were stable for most of the summer.

Going into this fall, natural gas in storage in the United States is running about 12 percent higher than the average for the past five years, according to the U.S. Energy Information Agency.

That ample storage should keep prices stable, according to the agency’s most recent short-term outlook. The agency predicts natural gas prices will actually drop about 3 percent in 2007 as compared to 2006.

Wild cards like hurricanes and the face-off between Iran and the United Nations over Iran’s nuclear ambitions could still cause dramatic swings in prices, Deering said. But overall, the ample storage situation bodes well for consumers.

Energy consumers also are getting more savvy about conservation and hedging energy prices, which is also helping smooth out price shocks, Deering said.

Local utility companies like NIPSCO and the Energy Information Agency will be making detailed winter energy forecasts in October, which will give a more exact picture of where prices are heading.