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Natural Gas Costs Less in Michigan

Posted on: Friday, 14 October 2005, 12:00 CDT

By Alejandro Bodipo-Memba, Detroit Free Press

Oct. 14--Michigan heating bills will be high this winter, but they'll among the lowest in the country, according to a federal report.

Peter Lark, chairman of the Michigan Public Service Commission, appearing at the agency's Be WinterWise campaign to lower gas bills at the Salvation Army office in Southfield, said Michigan consumers pay the eighth-lowest prices for natural gas in America.

A report published by the U.S. Department of Energy's Energy Information Administration says that Michiganders are paying some of the lowest prices -- an average of $10.63 per thousand cubic feet (mcf) -- in the country to heat their homes. Michigan also has the least expensive costs in the Midwest, the report says.

Wholesale gas prices have nearly tripled since 2001 as supplies have tightened because of rising global demand and cuts in production because of hurricane damage to natural gas distribution facilities in the Gulf of Mexico.

"Nobody likes to see a 38 percent increase from a year earlier, but that is about half the increase the rest of the country is in store for this winter," Lark said Thursday. "Our gas prices are quite good due to the amount we have in underground storage around the state."

He was referring to a PSC report released Tuesday, which says the cost of natural gas for the upcoming winter season is expected to average 46 percent more than it did last year. For the year, prices are expected to be 38 percent higher.

According to the EIA rankings, Alaskans pay the least with an average of $6.04 per thousand cubic feet, while Hawaii residents pay the most at $27.8 .

A well-insulated 1,800 square-foot home in Michigan typically uses an average of 120,000 cubic feet of natural gas a year, Lark says.

With 80 percent of the natural gas it expects to use this winter available in underground storage, Michigan is one of the lucky states heading into the cold-weather season. Despite having significant supplies in storage, Michigan natural gas prices will remain high because utilities have to buy enough natural gas on the open market to satisfy the remaining 20 percent of anticipated demand this winter.

Michigan has the largest underground storage capacity for natural gas in the nation with 55 fields throughout the Lower Peninsula, according to EIA. All of the state's utilities buy gas by way of futures contracts from producers and gas marketers throughout North America.

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Source: Detroit Free Press

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