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Natural gas prices hit 7-year low

KANSAS CITY, Mo. — Natural gas prices are increasingly unlikely to cause much discontent this winter.

Earlier this summer, it became apparent supplies of the fuel were abundant and falling prices could give consumers on stretched budgets a big break.

But the decline has accelerated and has now hit seven-year lows. In trading last week on the New York Mercantile Exchange, the price dropped to just 20 percent of what it was in July 2008.

"We're going to get some relief this year," said James Williams, an analyst for WTRG Economics.

Prices actually began to fall last winter, but the decline came after much of the gas for the season had been purchased.

For this winter, utilities have been able to purchase more gas at lower prices and have been able put more into storage.

Prices could decline further, feeding confidence that sharply lower heating bills are within reach. Average household savings of $200 to $300 for the winter are possible.

Events could curb those savings. A hurricane in the Gulf of Mexico could knock out natural-gas wells. Or a colder winter than last year's could boost household usage.

But the country, at least for now, is awash in natural gas. The amount of the fuel in storage, which is used to meet a portion of winter demand, is expected to be at a record level.

"We think it looks pretty good," said Jason Fulp, a spokesman for Missouri Gas Energy.

A gas bill includes customer charges and other fees beyond the cost of gas. But the cost-of-gas charge, which is the cost the utility paid for the fuel plus storage and transportation fees, accounts for a majority of the bill during the winter when an average residential customer uses around 80,000 cubic feet of gas.

Missouri Gas Energy's charge for gas a year ago was $9.45 per 1,000 cubic feet. Today, it's $5.40. The utility next month will file its cost-of-gas charge for the winter, and while it could increase, it is expected to remain sharply lower from a year ago.

The utility earlier this year filed a request to raise its rates by an average of $5.21 a month for residential customers. The request, which would not affect the cost of gas, would probably not go into effect until March, if approved.

The sharply lower cost-of-gas charges, if they persist, suggest savings of more than $400 for the average household when compared to last winter.

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