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PHONE: 202/326-9316
FAX: 202/326-9334
E-MAIL: clegates@ngsa.org>
NOTE: The following letter was sent
to consumers who wrote to NGSA about natural gas home heating
prices this winter.
Dear Natural Gas Consumer:
Earlier this winter, you wrote to us about
a recent and unexpected rise in your heating bill. We received
a number of such letters, and we wanted to get back to you to
assure you of our continuing concern about your satisfaction in
using natural gas.
During this past winter, consumers in several
states experienced an increase in their heating bills that resulted
from a sudden, sharp rise in short-term "spot market"
natural gas prices in December. That rise resulted from a temporary
and, as it turns out, baseless "panic" about the possibility
of a colder-than-average winter.
As it turned out, this winter has been warmer
than average in most regions. Consequently, supply prices have
plummeted; the amount of gas that cost $4.50 in December now sells
for about $1.70. Consumers whose distributors bought at the high
point paid higher prices; so did those whose distributors negotiated
supply contracts linked heavily to "spot market" (short-term)
prices. But consumers whose distributors bought in advance, at
the low, or whose distributors used long-term contracts, storage,
and other price-leveling strategies, did not.
A number of distributors and state regulators
are looking at the experience of this past winter in order to
learn from it. Some are examining new methods for predicting
prices. Others are considering an increase in long-term contracts
or in their use of price-leveling strategies.
Increased competition and less regulation
are relatively new ideas in the natural gas industry. But already,
those changes have, on average, dramatically lowered consumer's
natural gas bills and increased both the supply of natural gas
and the reliability of the industry. As in all competitive markets,
there are occasional unexpected shifts in natural gas prices;
the tools and techniques to manage those shifts are becoming better
understood every day. And the very positive results of competition
in supply and marketing have state governments considering an
end to local monopolies on natural gas service in favor of permitting
several companies to compete for your business.
Competitively priced natural gas has spurred
the American economy and provided families with a higher standard
of living. Producers are proud of our role in those achievements.
Please be assured that all of us in our industry are dedicated
to providing you with clean, reliable natural gas throughout your
lifetime and for generations to come.
Sincerely
Charlotte LeGates
Director, Industry and Public Relations
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This page was originally placed March 22, 1996; last updated August 31, 1997