Winter gas prices are looking much better this year than last and will be easy to deal with than this month's AC bills.
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Natural gas flowing from shale wells like this one developed for Chesapeake Energy in Carrol County has knocked down prices for Dominion East Oho gas company's Standard Choice customers. CLEVELAND -- Consumers suffering from this summer's high AC-accelerated electric bills can find some comfort in the natural gas outlook for this fall and winter.
Gas prices are running much lower this year than last as the glut of natural gas continues to flow. Analysts say increases in drilling efficiency are producing more gas despite fewer new wells being drilled.
Gas already in storage for next winter was 25 percent higher than year ago levels by the end of the third week in July, according to the latest available information from the U.S. Energy Information Administration. The EIA will update its estimates today.
Dominion East Ohio customers are looking at an especially rosy future -- if they are buying gas through the Dominion's Standard Choice Offer, or SCO.
The company randomly assigns those customers to suppliers who survived Dominion's annual auction last February. Those winning companies must charge SCO customers the same price, which Dominion computes every month by adding just 2 cents to the national monthly commodity price set on the New York Mercantile Exchange.
The 2-cent profit margin is not as thin at it looks because wholesale suppliers in Ohio with access to shale gas now moving through Dominion's major pipelines are able to buy gas at prices much lower than national prices. Credit that to the regional glut.
Dominion's August SCO price, which begins on Wednesday, Aug. 12, will be $2.906 per Mcf, and Dominion figures the average consumer bill will be about $31.53, down from $33.12 in August 2014.
Looking ahead, the commodity price of natural gas this fall and winter does not even break $3 an Mcf until December.The contract price for delivery of gas in December was $3.055 an Mcf at the end of Wednesday's trading on the New York Mercantile Exchange, or NYMEX. January gas closed at $3.163 and February at $3.168.
If these prices were set now, Dominion SCO customers would in each case would be paying just 2 cents per Mcf more than the NYMEX price.
Those prices are a moving target and are not final until three days before the month in question. But monthly prices for the first eight months of this year have been consistently lower than those in 2014 and 2013. Storage levels and increasing production are the reasons behind that trend.
The year to date average price for 2015 as of August is $2.816 per Mcf -- much lower than the 2014 average of $4.415 per Mcf.
In early July the EIA forecast the average annual price for 2015 at $2.97 per Mcf. The agency is scheduled to take another look at energy supplies and prices next week when it issues its August Short Term Energy Outlook.
The story is similar for Columbia customers, though the prices are much higher, because suppliers pushing gas into Columbia's pipeline system are unable to draw from the same regional shale gas glut that flows into Dominion's system. In other words, Columbia's Standard Choice customers are paying national prices, not regional prices.
Columbia sets its monthly Standard Choice Offer by adding $1.29 to the price set on the NYMEX. Columbia customers buy gas by the 100 cubic feet, or Ccf. In other words, the price quoted is one tenth the MCF rate.
Columbia's August Standard Choice Offer is $0.4176 (41.76 cents) per Ccf. Click here for an explanation from the company.