Natural Gas Prices Competitive with Oil / but, Some Households Not Reaping Benefits of Savings

By Steven P. Rosenfeld, Ap | THE JOURNAL RECORD, June 17, 1986 | Go to article overview

Natural Gas Prices Competitive with Oil / but, Some Households Not Reaping Benefits of Savings


Steven P. Rosenfeld, Ap, THE JOURNAL RECORD


NEW YORK (AP) - Natural gas prices have plunged to stay competitive with oil, but some American households face rate increases for gas and millions of others are receiving only a portion of the savings being offered to industrial customers.

Prices that interstate pipelines and distribution companies pay for uncontrolled natural gas on the open market have dropped as low as $1.30 for each million British thermal units of energy. That is down 46 percent from a year ago, to a level last seen in the 1970s.

The big winners are companies with the capability of switching from natural gas to oil, giving them a major bargaining chip for winning concessions from suppliers.

With oil at about $15 a barrel, the residual fuel oil needed by an industrial user to produce 1 million Btus of energy costs about $2.40.

Boeing Co., for instance, recently switched to residual oil from natural gas at most boilers in two Seattle-area plants at a saving of $1.70 for each million Btus. That could add up to $1.5 millionover the next 12 months.

Boeing, which spent $28.6 million on natural gas last year, prefers gas to oil even if it means spending as much as 80 cents more for each 1 million Btus, spokesman Craig Martin said. But, he added, with the current wide price spread favoring oil, ""there isn't much reason for us to stay with natural gas.''

Consolidated Edison Co. of New York suspended natural gas purchases for only one day earlier this year before gas suppliers lowered prices. The utility, which has not had a rate increase in more than three years, says typical residential electric bills in the metropolitan New York area were 5.2 percent lower in April than a year ago because of lower fuel costs.

To keep six electric utilities from switching to oil, Southern California Gas Co. is charging the utilities less than the average price it pays for gas. The utilities consume 39 percent of the entire volume distributed by Southern California Gas.

At the same time Southern California Gas also has proposed raising bills to millions of residential customers by an average of 11.7 percent, saying that if the company's big customer switched to oil, residential rates could rise even higher.

In most areas, though, residential rates are falling.

""I don't think they're going to be raping residential customers,'' David Fleischer, an analyst who follows the natural gas industry for Prudential-Bache Securities Inc., said of gas distributors.

The natural gas industry, which has been beset by excess supplies for much of the 1980s, faces a major battle to maintain its share of the energy market following the collapse of oil prices from more than $30 a barrel late last year to about half that now. The industry already has seen U.S. demand for gas fall from 22 trillion cubic feet in 1972-73 to about 17 trillion.

""With oil at $15 per barrel, no segment of the gas industry will escape unscathed,'' analyst Marion Stewart said in a recent edition of his Stewart Energy Outlook.

The average price pipelines pay gas producers has been falling 5 cents to 10 cents a month, and the decline will continue, the American Gas Association predicts.

""We're in a literal dog fight for market with oil,'' said Nicholas Bush, president of the Natural Gas Supply Association, an organization of producers. ""Every indication is that this fight is going to be intense this summer.''

Oil accounts for about 42 percent of the nation's energy consumption, followed by natural gas, at 24 percent, with 47 million metered customers.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Natural Gas Prices Competitive with Oil / but, Some Households Not Reaping Benefits of Savings
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.