Natural gas prices keep rising ahead of summer energy crunchby Ambar Espinoza, Minnesota Public Radio
Analysts at the Minnesota Department of Commerce say this year's natural gas prices are the highest they've seen since hurricanes Rita and Katrina in 2005. Usually this time of year, people aren't thinking about natural gas prices because the weather is getting warm. But analysts say supplies are low and demand is high, so consumers should worry about conserving.
St. Paul, Minn. — Robert Klemenhagen from Minnetonka is a retired accountant. He's been tracking his water, electricity, and natural gas usage for more than two decades.
By nature, he likes to play with numbers, so tracking this information comes easy to him. But he's also concerned about the economy and the environment. And he's noticed that the price of natural gas has gone up significantly in recent years.
"We all see the gas prices when we pull up to the gas pump, but we don't see this," said Klemenhagen. "This is not as visible."
The reason it's not as visible is because utility companies send the bill after consumers use energy. This doesn't stop Klemenhagen from watching the price, and he's taken measures to be more energy efficient at home to save money.
That's exactly what Vincent Chavez says Minnesotans should do. He's a natural gas analyst at the Minnesota Department of Commerce. Chavez said 68 percent of Minnesota homes use natural gas, so most consumers should be concerned about the price.
"People should be informed," said Chavez. "There is nothing more powerful to a consumer than knowing the markets that they face so they can make wise decisions."
Normally this time of year, the price of natural gas drops between cold and hot seasons. But that's not happening this year.
Chavez said the weak dollar is pushing up the price of crude oil. As oil prices go up, so do natural gas prices. And Chavez said worldwide competition for natural gas is affecting the supply.
Demand is also up because more power companies are using natural gas to generate electricity. It's cleaner and cheaper than oil.
Chavez said there could also be a second peak in prices this summer. Utilities often turn to natural gas-fired plants to supply additional power at times of peak demand, which directly affects consumers.
"Because natural gas is also used as a fuel source for electric generation, when it gets extremely hot, when you turn on your air conditioner, you may end up using natural gas," Chavez said. "Even though that seems a little bit odd, that's what's happening."
The biggest factor affecting natural gas prices is the weather. And because that's so unpredictable, Chavez advises consumers to budget for the worst case scenario now. He said even if residents can't afford to save actual dollars, they can try to conserve energy.
That's what condo owner Judy Chucker is planning to do. Chucker, who lives in a Minneapolis suburb, is worried about how a hot summer might affect her utility costs. She recently went back to grad school so she's not working.
Chucker said she doesn't have a lot of wiggle room to plan ahead because she's on a fixed income. She's using what would be her retirement to get by.
"The air conditioner, while it's a fairly new one, is a wall air conditioner, not a central air, so it's far more inefficient in cooling -- and I'm facing south," said Chucker. "It'll just be much more difficult."
Chucker also knows how to read her utility bill, and has reduced her energy use just like Robert Klemenhagen.
Klemenhagen wants to take his tracking to the next level by recording weather along with his usage and price rates. He said he wants to know what he's up against and plan ahead.
"We all know that our economy is basically very sensitive to our use of energy," said Klemenhagen. "If we ever have a problem with energy, we're going to have real big problems with our economy."
Commerce Department analysts say the natural gas picture will become more clear in the next few months. They say storage is running a little shorter than the traditional five-year average, so it's one of many factors they'll be monitoring.
- Morning Edition, 04/24/2008, 7:20 a.m.