What Are Residential Customers Paying For in Their Natural Gas Bills?
Overview of Natural Gas Prices for the week ending November 3, 2010
* Price changes were mixed this week, with much regional variation across the country. At the Henry Hub in Erath, Louisiana, prices posted a net decline on the week of 2 cents, falling from $3.37 per million Btu (MMBtu) on Wednesday, October 27, to $3.35 per MMBtu on Wednesday, November 3.
* At the New York Mercantile Exchange (NYMEX), the December 2010 futures contract (which became the near-month contract on October 28) rose $0.073 from $3.763 per MMBtu last Wednesday to $3.836 yesterday.
* Working natural gas in storage increased to 3,821 billion cubic feet (Bcf) as of Friday, October 29, according to the Energy Information Administration’s (EIA) Weekly Natural Gas Storage Report.
* The West Texas Intermediate crude oil spot price rose on the week from $81.9 per barrel (or $14.12 per MMBtu) to $84.45 per barrel ($14.56 per MMBtu).
* The natural gas rotary rig count, as reported Friday, October 29, by Baker Hughes Incorporated, rose by 2 to 967. The rig count has mainly remained flat over the past several months.
Overview of Natural Gas Prices for the week ending October 13, 2010
- Natural gas spot prices posted gains at most markets across the lower 48 States since Wednesday, October 6, accompanied by double-digit increases in trading since the holiday weekend. Price increases on the week ranged up to 25 cents per million Btu (MMBtu), with the Henry Hub natural gas spot price increasing $0.02 per MMBtu since last Wednesday, averaging $3.58 per MMBtu in trading yesterday, October 13.
- At the New York Mercantile Exchange (NYMEX), the futures contract for November delivery at the Henry Hub settled yesterday at $3.696 per MMBtu, falling by $0.169, or about 4 percent, since the previous Wednesday.
- Natural gas in storage totaled 3,590 billion cubic feet (Bcf) as of October 8, about 7.4 percent above the 5-year (2005-2009) average. The implied net injection for the week was 91 Bcf.
- The spot price for West Texas Intermediate (WTI) crude oil decreased by $0.18 per barrel since Wednesday, October 6, ending the report week at $83.03 per barrel, or $14.32 per MMBtu.
Overview for the week ending October 6, 2010
* Natural gas spot prices fell at most pricing point locations across the board in the lower 48 States as demand fell. The price at the Henry Hub fell 25 cents, or about 7 percent, since last Wednesday, September 29, from $3.81 per million Btu (MMBtu) to $3.56 per MMBtu.
* The West Texas Intermediate crude oil spot price settled at $83.21 per barrel, or $14.35 per MMBtu, on Wednesday, October 6. This represents an increase of $5.36 per barrel, or $0.92 per MMBtu, from the previous Wednesday.
* Working natural gas in storage increased to 3,499 billion cubic feet (Bcf) as of Friday, October 1, according to the Energy Information Administration’s (EIA) Weekly Natural Gas Storage Report. Inventories are 220 Bcf greater than the 5-year (2005-2009) average for this time of year.
* At the New York Mercantile Exchange (NYMEX), the November 2010 contract fell about 10 cents or 2 percent from the $3.962 per MMBtu the previous Wednesday to $3.865 yesterday.
* The natural gas rotary rig count, as reported on October 1 by Baker Hughes Incorporated, fell by 5 from 967 to 962. Though this is the second week in a row the rig count has fallen, natural gas rigs have oscillated somewhat, from 947 on June 4 to 992 on August 13, over the past few months.
source: energy information agency
Overview (For the Week Ending Wednesday, September 29, 2010)
- Natural gas spot prices at most market locations in the lower 48 States decreased between 5 and 10 percent this report week (Wednesday to Wednesday, September 22–29). The week coincided with the first week of fall, a season in which demand is typically lower given the lack of extreme weather conditions across the country. During the report week, the Henry Hub spot price decreased by $0.21 per million Btu (MMBtu), or 5 percent, to $3.81 per MMBtu.
- The price of the October futures contract at the New York Mercantile Exchange (NYMEX) at final expiration on September 28 was $3.84 per MMBtu, or about 3 cents more than the price of the contract at the end of its first day of trading as the near-month contract on August 30. The November contract finished the report week at a price of $3.96 per MMBtu, or 13 cents lower than the previous Wednesday.
- During the week ending Friday, September 24, estimated net injections of natural gas into underground storage totaled 74 billion cubic feet (Bcf). Working natural gas in underground storage was 3,414 Bcf, which is 6.3 percent above the 5-year (2005-2009) average.
- The West Texas Intermediate (WTI) crude oil spot price increased $4.87 per barrel during the report week. The WTI crude oil spot price averaged $77.85 per barrel yesterday (September 29), or $13.42 per MMBtu.
The price of natural gas has two main parts (all cost estimates include a number of taxes):Transmission and distribution costs – to move the natural gas by pipeline from where it is produced to the customers local gas company, and to bring the natural gas from the local gas company to your house.Commodity costs – the cost of the natural gas itself.In the past five winters (2002-2003 through last winter) the cost of natural gas at the wellhead (commodity cost) has constituted more than 50 percent of the residential price,and this trend is expected to continue through the next winter (Figure 1). This relative cost pattern differs from earlier years in which the commodity cost was consistently below 50 percent. The large commodity cost share has resulted from unusually high prices for natural gas during these winters. The high prices were driven by market conditions that included weak natural gas production despite increased drilling levels, colder-than-normal weather for long periods during some heating seasons, production disruptions from hurricane activity in the Gulf of Mexico, fluctuating net import levels, and record high crude oil prices.