Natural Gas Choice In Maryland

[jazz4cash]

Where are nat gas retail prices headed?
We use nat gas to heat our home. We can choose the supplier and currently have a supplier based in Atl. Our contract for 12 months is .49/therm. The new offer effective Dec is a 12 month contract for .69 cents. I also see some offers for .67/therm fixed for 3 years. Current variable rate is .79/therm

I hear alot about oversupply and gas flaring in North Dakota because they have no way to get the gas to market.....maybe not relevent.

OTOH, nat gas prices surged the other day when a midwest cold snap was forecast.....

I am inclined to go the variable rate path and take my chances.

Any feedback, insight, etc. on how to play (hedge) these choices is appreciated.

FWIW, I wrote this awhile back wrt Electricity......
http://www.early-retirement.org/forums/f28/electric-choice-in-md-25469.html?highlight=electric

 

[bld999]

Interesting that you can switch suppliers, it must cause some bookkeeping headaches for the suppliers or distribution network owner.
We are stuck with a "territory' power model here in the Pac nw.

A couple things I can think of:

Will congress approve export of LNG?
Will crude stay in the basement long enough to shut in us gas producers?
Will Penna. and NY relent on drill and frack prohibitions and flood the east coast with gas?
Will Iran, Lybia, Syria, or Afgan start sending rivers of gas into the market?

 

[brewer12345]

Interesting that you can switch suppliers, it must cause some bookkeeping headaches for the suppliers or distribution network owner.
We are stuck with a "territory' power model here in the Pac nw.

A couple things I can think of:

Will congress approve export of LNG?
Will crude stay in the basement long enough to shut in us gas producers?
Will Penna. and NY relent on drill and frack prohibitions and flood the east coast with gas?
Will Iran, Lybia, Syria, or Afgan start sending rivers of gas into the market?

LNG exports are already approved and will start flowing in a year or two. The problem for the east coast is NIMBY-produced shortages of pipeline capacity. There is so much gas coming out of the Marcellus they do not know what to do with it, but the northeast in particular may have shortages this winter.

It is unlikely you will see anyone flood the market internationally. LNG tankers are in short supply.

 

[bld999]

LNG exports are already approved and will start flowing in a year or two. The problem for the east coast is NIMBY-produced shortages of pipeline capacity. There is so much gas coming out of the Marcellus they do not know what to do with it, but the northeast in particular may have shortages this winter.

It is unlikely you will see anyone flood the market internationally. LNG tankers are in short supply.

Ah, thanks for the correction, maybe it's crude only that can't be exported?

 

[meierlde]

Where are nat gas retail prices headed?
We use nat gas to heat our home. We can choose the supplier and currently have a supplier based in Atl. Our contract for 12 months is .49/therm. The new offer effective Dec is a 12 month contract for .69 cents. I also see some offers for .67/therm fixed for 3 years. Current variable rate is .79/therm

I hear alot about oversupply and gas flaring in North Dakota because they have no way to get the gas to market.....maybe not relevent.

OTOH, nat gas prices surged the other day when a midwest cold snap was forecast.....

I am inclined to go the variable rate path and take my chances.

Any feedback, insight, etc. on how to play (hedge) these choices is appreciated.

FWIW, I wrote this awhile back wrt Electricity......
http://www.early-retirement.org/forums/f28/electric-choice-in-md-25469.html?highlight=electric

The current price price per therm on the exchanges is about $.41/per therm at the Henry Hub. So the .69 is not a bad deal if it includes the delivery costs to your home.

 

[brewer12345]

Ah, thanks for the correction, maybe it's crude only that can't be exported?

Pretty much. It appears that things are getting squishier, as "condensate" is now being exported and in some parts of the country that stuff comes straight out of the ground.

 

[jazz4cash]

The current price price per therm on the exchanges is about $.41/per therm at the Henry Hub. So the .69 is not a bad deal if it includes the delivery costs to your home.

Does not include distribution cost....which is on the order of .50/therm.

 

[jazz4cash]

Interesting that you can switch suppliers, it must cause some bookkeeping headaches for the suppliers or distribution network owner.
We are stuck with a "territory' power model here in the Pac nw.

This choice of suppliers is a legacy of the deregulation wave fostered by Enron and others.

As I think I mentioned in my post about Electric Choice, the general public is generally ignorant of this option. There are lots of business models out there (e.g. bundling gas and electric, multi-level marketing, etc.) Today I received an offer to earn airline miles based on how much gas we use. As far as headaches go, occaisionally there has been a billing glitch between the supplier and the local utility (distributor), but the local utility is pretty awful as far as customer service in general. Looks like we will have a 30% spike in our cost for natural gas at a time when there is a glut of supply and no way to move the product.

 

[brewer12345]

Looks like we will have a 30% spike in our cost for natural gas at a time when there is a glut of supply and no way to move the product.

There may be an excess of gas where it is produced, but in the East where a lot of the consumption happens there is a serious shortage of pipeline capacity. That means there is not one natural gas market, but many Balkanized ones. I actually read an article this fall suggesting that if there are too many really cold days in the Northeast there could actually be a shortage of natural gas there (not enough to go around).

 

[jazz4cash]

There may be an excess of gas where it is produced, but in the East where a lot of the consumption happens there is a serious shortage of pipeline capacity. That means there is not one natural gas market, but many Balkanized ones. I actually read an article this fall suggesting that if there are too many really cold days in the Northeast there could actually be a shortage of natural gas there (not enough to go around).

So maybe I should lock in the .69/therm price, but it wouldn't matter much if they don't have the product to deliver.

This choose your supplier scheme could fall apart rapidly if one supplier is prudent and acquires adequate product while another supplier rolls the dice....it's not like they can sort that out in the pipeline. I guess they could put a lock on my meter, though!