New prices will come out in about two weeks. They’re not likely to be as good. Those who want to lock in for the year won’t go far wrong if they lock in before the January prices kick in on the 5th.
Winter time gas prices haven’t been this low in three years.
Why the low prices?
A coolish summer, warmish fall and sluggish economy all weakened demand for natural gas this year. Production was up, and supply-smashing hurricanes stayed away from the U.S. Gulf Coast.
The result is a supply glut that is helping not only residential customers, but industrial ones like Caraustar Industries, which uses gas in its recycled paper mills in Austell.
“There are two things driving this,” said Caraustar chief financial officer Ron Domanico. “The unseasonably moderate temperatures and the supplies, which are at historic highs.”
Gas suppliers were still pumping gas into winter storage into early December, during weeks when they normally would have started pulling it out.
“It has never been this full,” Domanico said then. “They don’t know if they’ll be able to find room for it all.”
By late November, wholesale spot prices for natural gas were below $3 per decatherm. In Georgia retail market rates, that’s 30 cent per therm, a far cry from the $1 to $1.50 per therm prices that gas customers were paying just a few years ago.
Despite the low spot prices, a lot of industrial users locked in at higher contract prices during late November and early December, said Domanico.
The contract prices were still good: “All you need is one cold snap and the speculators will run the prices way up,” he said then. “A lot of the price on gas is done by speculators instead of the people who actually use the gas.”
A cold snap did hit earlier this month, and wholesale prices began to climb.
Despite that, supplies remain above both last year’s levels and the average level for the past five years, according to the Energy Information Administration of the federal Department of Energy.
For Georgia retail gas customers, any wholesale increase would show up in the prices marketers post next month.
Locking in always carries a risk, said Domanico, but the risk right now isn’t big.
Prices could always get lower, but they’re so low now that they have little room to fall.
Domanico also said he doubted prices would rise substantially.
“That would require the economy to improve dramatically this winter,” he said.
Still, “you’re not going to go wrong by much by locking in,” he said.