Gas prices to increase
Published 2:52 am Wednesday, April 2, 2003
Natural gas prices are expected to increase this month, according to Atmore Utilities Board Manager Tom Wolfe.
"This isn't great news, but there are factors that we can't control that create this price volatility," Wolfe said. "We want our customers to be aware of that, and we want our customers to know we're not happy with this situation either."
Four main factors have contributed to the expected increase – namely being a colder than normal winter across the nation, higher oil prices, the slumping economy and the tension and speculation leading up to the war in Iraq.
Prices have been subtly rising in recent weeks, and a perceived supply shortage in the natural gas industry has now accelerated the increase.
This winter's sustained cold temperatures have helped deplete natural gas storage supplies, which were 96 percent full at the start of the winter season. February posted temperatures nearly 20 percent colder than normal, and March posted similar temperatures. Combine that with the fact that natural gas prices have risen nationwide to the point where they are nearly four times what they were just a year ago.
"March (natural gas) prices have never been the peak for winter prices in the natural gas industry – never," Wolfe said, "and it looks like that will be the case this season."
Speculative energy traders have also affected natural gas prices in response to higher crude oil prices, the down economy and fears leading up to the war. Meanwhile, in response to dwindling storage supplies, exploration and production companies have responded with marginally increased drilling activity this winter; however, it will take several months to bring those supplies online.
Residential natural gas prices are made up of three components:
1.) The cost to transport the gas from where it is produced to the city,
2.) The cost to transport the gas from the city gate to the home, and
3.) The cost of the natural gas itself.
The cost to transport the gas to the city is based on a regulated fee. The cost to deliver the gas to the customer is also unchanged. The cost of the natural gas commodity is what fluctuates with the market as it relates to weather, supply and demand issues and energy speculators. It is this component that is resulting in consumers' higher monthly gas bills.
The Utilities Board of the City of Atmore has been providing natural gas in the community of Atmore – serving more than 1,400 residential, commercial and industrial customers – for more than 50 years.