Heating with Natural Gas May Be Cheaper This Winter

September 24, 2009
Michael Sheehan

A crippled economy and tropical storms in gas-producing areas have contributed to a steep drop in the price of natural gas, a more than 80% drop from July 2008 highs.

For a long time, the price of natural gas moved in tandem with oil prices, defying the energy sector experts who pointed to the country’s huge excess supplies of natural gas. In recent months, however, natural gas prices have severed ties with oil, thanks to the crippled economy and few tropical storms in gas-producing areas, both of which have contributed to a plunge in natural gas prices of more than 80% from the highs in July of 2008.

Unless conditions change dramatically, the experts say, that would bring some welcome relief to homeowners who heat with natural gas. Some gas utilities are predicting a drop of as much as 25% in home heating costs this winter, depending on the weather and where the home is located. Those who have oil heat should also see some savings, although heating oil prices have not dropped as dramatically as natural gas. And because most electric utilities use natural gas to generate at least a portion of the electricity they provide, consumers may also see small cut in their electric bills.

Natural gas producers are hoping to pump up demand by promoting more uses for the fuel. One of the more promising efforts, according to industry observers, is using compressed natural gas to fuel cars and trucks. According to the Natural Gas Vehicles for America, natural gas can provide Americans with an environmentally friendly, affordable, and home-grown alternative to foreign oil. NGVA also notes that natural gas has already proven itself as a viable vehicle fuel, pointing to cities like Los Angeles, Boston, and Washington, DC, which already have large natural-gas-powered bus fleets and to companies like UPS and Waste Management, which operate significant numbers of natural gas vehicles.