Archive for Thursday, July 3, 2003

Increasing gas prices noxious to consumers

July 3, 2003

The Eudora Ministerial Alliance usually helps Eudorans in need with utility bills, but this winter that might be more difficult.

In June, gas companies routinely take advantage of low demand to refill their storage facilities with natural gas priced from $2 to $3 per million Btu. Last month, the price was $6.25, said Rosemary Foreman, public information officer for the Kansas Corporation Commission. That price was comparable to the cost of natural gas during the winter of 2000-2001, when an extremely harsh winter sent prices to all-time highs.

"Based on what all the experts and analysts are predicting, we are in for a winter of extremely high gas prices, and if we have a cold winter, it could be a very serious problem," Foreman said. "We kind of hope we're Chicken Little and the sky doesn't fall, but we are very concerned for consumers."

Holy Family Catholic Church's the Rev. Ray Burger, who is in charge of utility bills for the alliance, said if prices were high and too many people needed help, the Ministerial Alliance would have to turn people away. Generally, the alliance receives referrals from area churches.

The sources of income that the alliance relies on for helping with utility bills is small, like collections from area churches and special events.

However, Burger said the good news was the alliance welcomed donations at any time. Those wanting to help the alliance cover the cost of increased gas prices can send donations to Burger at Holy Family or to any other Eudora area church.

The good news for consumers is they had time to prepare, Foreman said.

"Add insulation, put up new storm windows -- do whatever you can to make your home more energy efficient -- and get on a level payment plan that equalizes gas payments throughout the year," she said.

The federal government deregulated natural gas suppliers in the early 1980s, meaning prices reflected supply and demand, Foreman said. Supplies were low for a variety of reasons, she said, including a harsh winter in some parts of the country and decreased imports from Canada.

But Foreman said the key reason for the supply shortage was a history of low gas prices that discouraged investment. Jerry Hunter, a spokesman for Atmos Energy, the Eudora natural gas provider, refined that statement somewhat.

"One of the things producers are looking for is stability of pricing," he said. "They want certitude they would be able to recover their investment."

Suppliers are responding to the shortage and taking advantage of the higher prices, Hunter said. That doesn't mean the number of drilling rigs has increased. That activity would only start in earnest if gas suppliers were allowed to drill in areas, mostly offshore, where they were currently restricted, he said.

"They would provide the supply to keep prices at a reasonable level," he said.

Hunter and Foreman declined to predict what consumers would pay for gas this winter.

"It's pretty hard to predict what prices are going to be, but they are going to increase simply because we're filling our storage at twice the price we did last summer," Hunter said. "That's just part of it, because we do blend what we already have in storage with what we buy on the spot market."

One variable in the price home consumers will pay for natural gas this winter is summer weather, Foreman and Hunter said. An abnormally hot summer would increase demand as electrical utilities use natural gas generators to produce electricity, they said.

Atmos and other gas utilities must sell natural gas to customers at the cost they purchased it, Hunter said.

It was in Atmos' best interest to keep prices down, Hunter said. More reasonable prices help the company attract high-volume commercial and industrial customers and keep delinquent payments at a minimum.

-- Contributing: Erinn R. Barcomb

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