Texas Railroad Commissioner Tony Garza warned the statelegislature and governor yesterday of an expected 55% increase innatural gas prices this winter for small customers and the expectedcontinuation of high prices for the next year to 18 months.
“With respect to supply, we do not anticipate that there will bewidespread interruptions of deliveries over the winter,” Garza toldLt. Gov. Rick Perry in a letter. “However, with a tight market, itis possible that customers other than residential and commercialcustomers could experience some short-term reductions in theirdeliveries. There should not be any disruption in meeting consumerneeds, barring, of course, any major mechanical failures in thedelivery system. I will keep you informed of any significant changein the price or supply outlook.”
Garza said increasing gas demand for power generation and theimpact of low prices 18 months ago on production have led to thecurrent high-price situation. “..Based on information presented atlast week’s meeting of natural gas suppliers, consumers, andregulators [at the Interstate Oil and Gas Compact Commission summitin Ohio], it appears that higher natural gas prices are expected topersist nationwide for at least the next 12 to 18 months.”
“…If the current spot price of natural gas remains at $5.00per Mcf compared to an average wellhead price last winter of $2.45per Mcf, then the typical homeowner using 10 Mcf per month would befacing an increase in heating costs of about 55% assuming that hisconsumption over the winter stays flat,” he said. “A colder winterwith more usage would obviously compound the increase in total costto the consumer.”
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