Relief in store: Lower natural gas prices

By David Markiewicz

The Atlanta Journal-Constitution

Finally, Georgia consumers have something they can warm up to: lower natural gas prices this winter.

Thanks to what one local gas marketer calls "a good perfect storm" of factors, natural gas customers could end up paying less this winter than a year ago.

Exactly how much less depends on where wholesale gas prices go from here, what kind of rate plan the customer has, and what marketer is providing the gas. Still, the overall trend is positive.

An abundant supply of natural gas now in storage, plus lower overall demand seems likely to help offset the natural uptick in gas prices that occurs each year when the weather turns colder.

So, while wholesale gas prices have risen a bit lately, the cost to users likely will be lower this winter than in previous years, marketers say.

"Georgia consumers can expect to pay less for natural gas this winter than they did last winter," said Terry Redman, director of corporate communications and community relations for SouthStar Energy Services/Georgia Natural Gas.

This time last year, Redman said, wholesale natural gas prices were 20 percent higher than they were recently. Retail prices generally follow in the same direction as wholesale prices.

While the interest among consumers in natural gas prices is decidedly local -- they care mainly about what they have to pay for their service -- the variables that determine those prices are international, macroeconomic and variable.

Gas supplies currently held in storage are up, for example, because of new discoveries of gas in shale and because of the lack of external events that could disrupt gas supplies, such as bad weather. The hurricane season, industry analysts note, has been uneventful.

At the same time, there has been lower consumption of gas by industrial customers due to the economy, which has slowed factories. Electric utilities have used less gas this summer because of relatively mild weather. Also, consumers increasingly are turning to more energy-efficient gas appliances, further lowering consumption.

Dan Hart, president and CEO of Coweta-Fayette EMC Natural Gas said, "Supply is abundant and our customers are reaping the benefits."

Hart termed the confluence of all the factors a good perfect storm.

Near-record high monthly natural gas prices in recent years hurt businesses and left residential customers undecided whether to lock in the existing rate or go instead with a variable market rate.

Hart said last September's rates might have been the lowest to lock in at, heading into the winter. But, he added, consumers who have not opted for a fixed rate yet, might not necessarily face dramatically higher prices.

In the event of a mild winter, Hart said, the variable rates available this season likely will be much lower than those available last winter.

One factor that marketers said could drive gas prices higher would be a snap of very cold temperatures.  If that happens,  they said, the gas in storage would be depleted and higher-priced gas would have to be used, increasing the cost to consumers.