Natural Gas Prices in North Carolina May Be on the Rise Again
Aug. 18–Natural gas costs could rise again on top of the rate increase that lifted prices to record levels in the Triangle this month.
Wholesale prices continue to climb, which means gas distributors such as Gastonia-based PSNC pay more for supplies and may pass on costs to consumers.
Natural gas prices follow those of crude oil, a competing fuel, and have soared because of higher world demand and speculative trading by investment firms.
“If prices stay at the level they are now, we probably can expect an additional increase at some point later in the year,” said Bill Williams, general manager for gas supply and sales at PSNC, which has 235,000 customers in the Triangle and 410,000 statewide.
Any increase would come after September, he said.
The company’s Aug. 1 increase of 9 percent raised the cost of heating and cooking for a typical home by an average $60 a year. Since then, wholesale gas prices have surged nearly 30 percent, and may rise more, experts said.
Consumers would feel the bite come winter when home heating increases natural gas bills, said Jeff Davis of Public Staff of the N.C. Utilities Commission. The group advocates for the public in utility rate cases before the regulatory agency.
Other North Carolina distributors also are bracing for higher wholesale prices and that’s likely to raise the cost of natural gas statewide.
Piedmont Natural Gas, N.C. Natural Gas and Eastern North Carolina Natural Gas, which supply customers in about 50 eastern counties, filed plans to raise rates as much as 18.5 percent effective Sept. 1. The rate requests are designed to track wholesale prices, which rise and fall.
The companies do not make more money from the higher rates. Still, the increases would raise gas costs for the typical home by at least $80 a year.
“They’re in the middle and have to pass on costs, kind of like an airline passing on higher fuel prices,” said Mike Pitman, director of trading for National Gas Distributors, a distribution and trading group based in Fayetteville.
Pitman said strong economic growth should sustain high demand and gas prices in the short term, and may lead to higher costs for consumers this fall. Rising demand for natural gas will sharpen that trend as more utilities switch from oil to gas to fire turbines and generate electricity.
Experts say energy traders are largely responsible for the higher prices. Many think traders will continue to elevate prices through hurricane season as they buy futures contracts to hedge against storm-related supply disruptions.
“I doubt PSNC’s last increase was enough to cover rising wholesale prices,” said Aubrey Hilliard, CEO of Horizon Energy, a Charlotte-based consulting and marketing firm.
“I would think there is going to be another one coming.” Hilliard said wholesale prices may fall after November if pension- and hedge-fund traders sell off gains made earlier in the year.
Wholesale natural gas prices closed down 36 cents to $9.39 Wednesday.
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