Natural gas prices expected to rise

Users of natural gas should expect to pay higher heating bills this winter, the gas industry warns.

While there is plenty of gas in storage, the market is expected to remain tight because of increased demand, the higher wholesale cost of gas and expected colder-than-normal weather, according to the Natural Gas Supply Association.

“This tight market could really impact customers’ bills in some regions, particularly during extreme weather,” said Joseph Blount, president of Unocal and NGSA chairman.

Natural gas prices, already high over the summer, soared to $6.16 a thousand cubic feet Wednesday on the New York Mercantile Exchange. The futures market indicated prices were likely to remain high, as gas for delivery in November jumped to $6.91 per thousand cubic feet.

The natural gas industry is entering the heating season with plenty of fuel. Largely because demand this summer was less than anticipated, there’s about 3.2 trillion cubic feet of gas in inventory, near record amounts and well above the target for the start of the heating season.

“It’s not that we’re running out of natural gas,” said Blount.

But he said the gas cost an average of $5.80 per thousand cubic feet, less than today’s spot prices but still 64 cents a thousand cubic feet more expensive than a year ago. The higher price will be passed on to customers in most cases.

Also, demand this winter “is expected to increase across all sectors” from industrial users and power plants to residential customers, said Blount.