Nov 1, 2007 - Knight Ridder Tribune Business News
Author(s): Jim Martin

Nov. 1--Try this for a double dose of good news. Natural-gas prices are going down, and expectations for a mild winter are part of the reason.

National Fuel Gas Distribution Corp. on Wednesday took some of the scare out of Halloween and the winter months ahead, announcing a 2.6 percent cut in the price of natural gas. The rate decrease, which takes effect today, will trim about $3 a month from the bill of the average residential customer. That typical customer, defined as someone using 100,000 cubic feet of gas per year, will see his monthly bill fall from $128.95 to $125.58. As always, the Buffalo-based utility stresses that it merely passes along the cost of gas to its customers and cannot profit from it. These quarterly rate adjustments are the means by which the utility makes adjustments to changing gas prices.

"This mechanism is used to reflect changes in the market price of natural gas purchased by the company for its customers during the course of the year," said Nancy Taylor, National Fuel's manager of corporate communications. Part of the rationale for lowering prices might be considered good news of its own. National Fuel reports that its predictions about gas prices were based in part on a forecast from the National Oceanic and Atmospheric Administration, which is predicting a milder-than-usual winter. While that could lower demand for gas, there's also good news on the supply side of the equation.

The Energy Information Administration is reporting that natural gas storage levels are 7 percent above the five-year average. The rate change, which brings the price of gas to $14 per thousand cubic feet of gas, is $1.26 a thousand higher than at this time in 2006. The new price, which rolls back a portion of a 9 percent increase made in August, falls well short of November of 2005, when the price of gas increased 24.29 percent to $16.99 a thousand. Taylor won't try to predict what prices will do next. "I don't think we can," she said. "We thought we had it figured out in August." The combination of lower demand and a good supply is what makes prices go down, she said, adding, "If the winter is milder than expected or colder than it expected, that might change again."

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