TRC Commissioner Issues Gas Price Warning
Texas Railroad Commissioner Tony Garza warned the state
legislature and the Texas Congressional delegation last week of an
expected 55% increase in natural gas prices this winter for small
customers and the expected continuation of high prices for the next
year to 18 months.
"With respect to supply, we do not anticipate that there will be
widespread interruptions of deliveries over the winter," Garza told
Lt. Gov. Rick Perry in a letter. "However, with a tight market, it
is possible that customers other than residential and commercial
customers could experience some short-term reductions in their
deliveries. There should not be any disruption in meeting consumer
needs, barring, of course, any major mechanical failures in the
delivery system. I will keep you informed of any significant change
in the price or supply outlook."
Garza said increasing gas demand for power generation and the
impact of low prices 18 months ago on production have led to the
current high-price situation. "Based on information presented at
last week's meeting of natural gas suppliers, consumers, and
regulators [at the Interstate Oil and Gas Compact Commission summit
in Ohio], it appears that higher natural gas prices are expected to
persist nationwide for at least the next 12 to 18 months."
"If the current spot price of natural gas remains at $5.00 per
Mcf compared to an average wellhead price last winter of $2.45 per
Mcf, then the typical homeowner using 10 Mcf per month would be
facing an increase in heating costs of about 55% assuming that his
consumption over the winter stays flat," he said. "A colder winter
with more usage would obviously compound the increase in total cost
to the consumer."
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