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Natural gas prices expected to dip slightly

WASHINGTON — Yes, there is a silver lining on the energy front.

Oil and gasoline costs may be hovering near all-time highs, but natural gas prices are at less than half the record set late last year.

That means that people who heat their homes with natural gas, or about three out of five U.S. households, could see their bills decline this winter for the first time in five years.

“Everything is working in the consumers’ favor right now,” says Donald Felsinger, CEO of utility Sempra Energy.

Prices have fallen because natural gas supplies are far above normal after a mild winter last year lowered demand, leading to an inventory surge.

The median retail price for natural gas is forecast at $1.34 per therm from October through March, according to the government Energy Information Administration. If realized, that would mark a nearly 10 percent drop from the prior winter, when it is estimated the average U.S. household paid $741 for 667 therms for natural gas heat.

But the decline doesn’t mean prices are headed to where they were earlier this decade: Compared with the 2004-2005 winter, residential prices are expected to be up more than 20 percent.

In that context, “it’s bad news all over again,” EIA economist Tancred Lidderdale says.

Homeowners who use heating oil, electricity and propane are expected to see prices at or slightly above last year’s costs, according to EIA.

Natural gas users aren’t fully in the clear. Prices could jump if an unusually hot summer leads to greater demand for natural gas-generated electricity or if a hurricane were to disrupt production, said Kenneth Yeasting of Cambridge Energy Research Associates.


 

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