Archive for Thursday, January 22, 2004

Price for natural gas deflates

January 22, 2004

Although natural gas prices were rumored to increase this winter, reports showed prices were actually slightly lower than in previous years.
Jim Bartling, manager for public affairs for Atmos Energy Gas Company in Olathe, said natural gas prices were lower compared to January 2003.
"Prices are a little lower than last year," Bartling said. "We're working diligently to keep prices as low as possible."
Bartling explained the billing process on a CCF/MCF scale. The price per every 100 cubic feet is $0.63501, while the price per every 1,000 cubic feet ---- which is priced by the New York Mercantile Exchange ---- is $6.35.
Although confusing, Bartling said the CCF/MCF billing style is how energy and gas companies determine prices for natural gas.
Despite the decrease, USD 491 Superintendent Marty Kobza, said he noticed a slight increase in the natural gas bill the school received.
"It's always a hardship on a fixed budget," Kobza said. "It does create a budgetary problem at times."
Kobza said the school district planned for an increase in the natural gas bill.
"We were budgeted for an increase for this time, so we're OK," he said. "We try to be prepared for any other increases."
Eudora resident Helen Sommer said she did not see a difference in her bill this month.
"My bill's not that big, and I have a big house," Sommer said. "They told us it was going to be high, but I haven't noticed a difference."
Bartling said the lack of increase was because of a new process called hedging. Atmos created this process after the winter of 2000-2001, when the prices were considered extremely high.
"The prices (for natural gas) went crazy. In the 26 years I've been in this business, those were the highest prices I'd ever seen," Bartling said. "People were taken by surprise, and we learned from that. We knew that couldn't happen again."
The hedging process involved buying and storing the natural gas during the summer. Bartling explained a financial instrument was used so companies could make a fixed price for customers to buy the gas. If the prices were raised, the customers were guaranteed the fixed price, but if the price was lowered the customer could buy the gas at the lowered price.
"We developed the process for the customers," Bartling said. "We take every step necessary to keep the price lower for the customers.
"While we use (hedging) in the 12 states we serve, I can't speak for any other company."
Eudora City Administrator Mike Yanez said he remembered the buzz about the natural gas prices going up.
"I recollect some reports in the national media that indicated prices would be increasing," Yanez said. "I'm not familiar with all the factors."
Yanez, who said he had not seen the natural gas bill yet, but he said he had to accept the fact that there would be an increase at one time or another.
As of right now, Bartling said he was expecting a price increase of about 10 percent for next year.
"My crystal ball's in the shop right now," Bartling said. "But seriously, there are many things that could affect a change in price. A lot of things can happen. No one has figured out what prices can do."
Bartling said weather was a key factor in natural gas price changes.
"We go by a 30-year average according to NOAA (National Oceanic and Atmospheric Administration) and what they consider to be 'normal weather,'" Bartling said.
Yanez said there was always a chance of prices increasing.
"You can always expect some sort of increase," Yanez said. "We're always subject to gas prices getting larger."
Kobza said he believed an increase could be expected.
"I know they're trying to find other methods (to make prices lower)," Kobza said. "But I don't foresee prices coming down."
Kobza said this could create a problem financially for the district if the budget continued to be cut.
"We need an increase in funding in schools," he said. "The costs just to operate the facilities continue to increase. If we don't receive government funding, we'll look into other programs and resources to pay for natural gas."

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