The 53 percent of U.S. households that use natural gas for space heating can expect substantially higher gas bills this winter heating season compared with last season. In a new brochure for residential natural gas customers, the Energy Information Administration (EIA) estimates that a typical household will pay about 44 percent more, due mainly to higher natural gas prices and a return to normal weather following last year's relatively mild winter.
The commodity cost of natural gas (the cost of the gas itself) is the second-largest component of residential gas bills, after the cost of distribution to households, and natural gas prices have gone up significantly over the last 2 years. In September 1998, the average price of natural gas at the wellhead (excluding the costs of long-distance transmission and distribution to households) was as low as $0.16 per therm, or $1.69 per thousand cubic feet (Mcf). By September 2000, the wellhead price had soared to $0.39 per therm ($4.00 per Mcf). The increase is due to market forces, especially an increase in demand for natural gas, as new housing is built that uses gas for heating and cooking and as new gas-fired electricity generating plants have come on line. The demand surge has stimulated a search for additional supplies, but there is typically a lag of 6 to 18 months between the drilling of new productive wells and delivery of the gas they produce. The resulting pressure on supplies will tend to keep prices higher than last year's through the winter.
Nearly 18 million households in the Midwest use natural gas for heating, the highest regional concentration in the country. According to EIA estimates, Midwest residential customers can expect to pay about 31 percent more for a given quantity of delivered gas than last winter (see table). Nationwide, the higher prices for natural gas and the expected increase in gas use (due to expected colder weather) means that a typical household will face a total gas bill about 44 percent higher than the previous heating season's. These are only forecasts, of course; consumers' bills could vary from these expectations for several reasons, including prolonged or severe winter weather; a sudden episode of very low temperatures early in the heating season when inventories are relatively low; disruptions in the pipeline supply system that interfere with timely delivery of natural gas supplies; or problems with other energy sources (such as a long outage at a non-gas-fired generating plant) that could raise demand for gas and put upward pressure on prices.
| Average Midwest Household Natural Gas Consumption, Prices, and Costs | ||||
Heating Season |
||||
Factor |
1997-98 |
1998-99 |
1999-00 |
2000-01 |
| Consumption | ||||
| Therms | 846.2 |
867.8 |
839.0 |
933.5 |
| Mcf | 82.4 |
84.5 |
81.7 |
90.9 |
| Residential Price | ||||
| Dollars per Therm | 0.64 |
0.61 |
0.64 |
0.84 |
| Dollars per Mcf |
6.56 |
6.27 |
6.61 |
8.58 |
| Heating Season Cost per Household (Dollars) | 541 |
530 |
540 |
780 |
| Notes: Data for 2000-01 are forecasts and assume normal winter weather. Prices and costs are in nominal dollars. Mcf = thousand cubic feet. Source: Energy Information Administration. |
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EIA regularly updates its data on natural gas demand, prices, and inventories. Current data can be viewed on the EIA website.
Residential Natural Gas Prices: What Consumers Should Know, DOE/EIA-X046; tri-fold color pamphlet.
If you are having technical problems with this site, please contact the EIA Webmaster at wmaster@eia.doe.gov or call 202-586-8959. For general information about energy or to request hard copies of this brochure, contact the National Energy Information Center at 202-586-8800 or infoctr@eia.doe.gov.
URL: http://www.eia.doe.gov/emeu/plugs/plresng.html
File last modified: November 20, 2000
