Natural gas price is nearing record

ATLANTA --- Natural gas markets are signaling that heating bills will be particularly punishing for consumers this winter.

With about five months until frost arrives, natural gas prices already are closing in on the record high prices hurricanes Katrina and Rita left in their wreckage in 2005. And that's before increased demand pushes up prices when the weather begins to chill.

"We think there is a possibility that (bills) may be very high," said Terry Redman, a spokeswoman for Georgia Natural Gas.

Exactly how high can't be answered with certainty. A lot depends on hurricane season and the dance between supply and demand.

The utility is urging customers to take steps now to reduce the pain winter bills might cause.

Ms. Redman said homeowners should check their doors and windows for drafts and add caulking or weather stripping if there are cracks or leaks. Having adequate insulation in attics can shave 30 percent off heating and cooling bills.

Additionally, customers might be able to sign up for a budget payment plan, which level out payments from month to month.

The average Georgia Natural Gas residential customer uses about 61 decatherms a year, which is about $780 based on Thursday's closing price before passthrough fees and taxes are added.

During last year's heating season, the cost before fees for the same customer would have been about $463.

The reason behind increasing prices is three-fold, Ms. Redman said.

The United States is importing less natural gas from Canada. Imports were down 5 percent in the second quarter of 2008 vs. the same period a year ago.

Add to that diminishing imports of liquefied natural gas, which can be converted to gas and used to heat homes.

Worldwide demand has pushed prices higher than what U.S. importers have been paying, and as result shipments are headed to other countries.

The good news, Ms. Redman said, is domestic natural gas production is growing. Prices would be even higher without that growth.

One of the most significant factors for natural gas bills this winter will be the hurricane season, which began June 1.

The federal Energy Information Administration estimates that if government forecasts for a busier-than-average hurricane season come true, storms will disrupt natural gas production in the Gulf Coast by about one-sixth of the magnitude of disruptions caused by Hurricane Katrina.

Reach Jake Armstrong at (404) 589-8424 or jake.armstrong@morris.com.

climbing prices

Even with the worst of summer heat yet to arrive, July futures prices for natural gas closed at $12.79 per decatherm Thursday on the New York Mercantile Exchange, considered a bellwether for energy markets. That's up from $7.60 the year before.

-- Morris News Service