Gas prices may rise this winter - The Buffalo News
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Gas prices may rise this winter

Expect to pay more this winter when the furnace kicks on.

Coming off last winter’s benevolent bills – when heating costs fell to their lowest level in a decade – National Fuel Gas Co. is predicting that consumers will pay almost 22 percent more this year.

But even with that big increase – the actual amount consumers will pay depends on how cold this winter turns out to be – heating costs still will remain relatively low by local standards.

National Fuel said Monday it expects the average heating bill in the Buffalo Niagara region to jump by about $128 from the beginning of November through the end of March to about $714, compared with the 10-year low of $586 last year, when consumers benefitted from steadily declining natural gas prices and warmer temperatures that meant consumers used less natural gas to heat their homes.

Since then, however, natural gas commodity prices have inched higher, and the Amherst-based energy company based its forecast on the assumption that consumers will use more gas than they did during each of the past two winters as more normal winter temperatures are predicted.

While heating bills for winter are expected to be more than last year, they’re still a far cry from heating costs that routinely topped $1,000 from 2005 to 2009. Natural gas commodity prices are about 40 percent lower today than they were in January 2010.

However, those prices currently are about 7 percent higher than they were a year ago and about 17 percent above the winter low set in mid-January.

If those projections hold true, it would be the fifth straight winter of relatively low heating bills in the Buffalo Niagara region. Heating costs during each of the last four winters have been running about 40 percent lower than they were during the winter of 2005-06, when heat bills averaged a record $1,124.

Karen Merkel, a National Fuel spokeswoman, noted the weather has such a strong influence on gas prices that forecasting heating costs can be difficult. Last winter, for instance, National Fuel predicted that heating bills would rise by an average of almost 7 percent, only to see them fall by nearly 5 percent to a 10-year low.

“It all hinges on the winter and what the weather does,” she said. “We’ve been fortunate the last two winters with the weather.”

Gas prices have been lowered by the robust supplies from the boom in production from the Marcellus Shale and elsewhere in the country.

“With so much production just to the south in Pennsylvania and so much capacity to move it from there to here, we have a very favorable supply situation,” said Gary Marchiori, the president of EnergyMark, a Williamsville-based energy services firm.

Heading into the winter, natural gas inventories are slightly above the five-year average for this time of year, according to data from the Energy Information Administration. Those robust supplies will help keep upward pressure off natural gas commodity prices, according to analysts from the Natural Gas Supply Association, an industry group.

The commodity price of natural gas stood at $3.63 per 1,000 cubic feet on Monday. National Fuel’s gas costs differ because the utility buys some of its gas in advance and stores it underground until it’s needed, and it buys some of it through advance-purchase contracts or purchases on the spot market, Merkel said.

The commodity price is important because it accounts for 42 percent of the total price that National Fuel’s residential customers pay. Operating costs associated with delivering the gas to customers, taxes, the company’s profits and interest make up the rest.

National Fuel, like all utilities in the state, does not make a profit on the natural gas that it sells its customers. The utility makes its money on the rates, negotiated through the state Public Service Commission, to deliver gas to homes and businesses.

It also helps that Western New Yorkers have steadily reduced the amount of natural gas they use to heat their homes, through more efficient furnaces and water heaters, and programmable thermostats. National Fuel’s average residential customer now uses about 45 percent less gas per year than in 1973.

About 86 percent of the households in Buffalo Niagara heat with natural gas, the U.S. Census Bureau says, while 7 percent heat with electricity and 3 percent with fuel oil.

That’s a big financial boost for Western New Yorkers, since heating with natural gas costs about 70 percent less than heating oil and almost a third less than electricity, according to nationwide data from the Energy Information Administration.


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