When Bryce Markham walks past a gas station, it’s easy to notice that the price goes up 20 cents overnight.
Natural gas is subject to similar price fluctuations. But these are easier to ignore until winter approaches and we learn that natural gas is heading in the same direction as gasoline and pretty much everything in between. Now customers are eager to buy what Markham has for sale: foam insulation to reduce heating costs in the winter.
âFor years, heat loss from your home has been a problem,â said Markham, owner of Midwest Foam Insulation. “People don’t realize it and they move on because natural gas is cheap enough.”
Not anymore. Natural gas recently sold for $ 5.84 per million British thermal units, or MMBtu, on the New York Mercantile Exchange, an increase of $ 1.04 in one week and a 120% jump since January . At the wholesale level, natural gas has not been so expensive in October since 2008.
âThis is a huge increase in the wholesale price of gas,â said David Sommerer, director of the procurement analysis department with staff at the Missouri Civil Service Commission in Jefferson City. The PSC regulates investor-owned utilities.
Wholesale prices have increased this year as power companies have used more natural gas during the hot summer months to meet demand for electricity, according to the United States Energy Information Administration. At the same time, natural gas production declined after Hurricane Ida hit the Gulf of Mexico at the end of the summer.
As winter approaches, the impact on home heating bills might not be as immediate as what motorists encounter at the gas station.
Wholesale natural gas is about half of a typical bill, but it is an unregulated cost that is passed on to the customer. Utilities, including Speyer at St. Joseph, can only adjust pass-through costs a few times a year through mechanisms known as Gas Purchase Adjustment and Real Gas Adjustment, which the PSC must approve.
âWe have yet to see the company’s records for this winter,â Sommerer said. âWe will know more in a few weeks.
To get a sense of how the cost to consumers may be less than daily market price changes, consider the extremely cold weather of last February that impacted the natural gas supply. Customers saw an increase in their heating bills at the time, but this was mainly due to usage as temperatures dropped. Spire has a pending case with PSC seeking to recoup the increased cost of natural gas associated with this weather event.
âThe tariffs were set during the previous period,â Sommerer said. “These were the best estimates as of fall 2020.”
Spire has indicated in the records that the weather-related adjustments could result in an increase of 10-25%, although the utility is asking for permission to spread this recovery cost over several years and increase a reimbursement mechanism. to offset some of the impacts.
âThis is really the first opportunity that companies are using to pass the impacts on to costs,â Sommerer said.
For now, the only certainty is that a harsh winter will drive up customer bills, regardless of the price of gasoline. Spire officials are urging customers to do what they can now to close curtains, patch cracks around doors and windows, and look into programmable thermostats.
Lemartt Holman, an energy efficiency representative for the southwestern Missouri area of ââSpeyer, said all those little cracks in a house can grow to the size of a beach ball. This allows a lot of heat to escape.
âIf you came home today and saw a beach ball-sized hole in your house, you would definitely take action,â he said. âIf a customer walks in and aggressively picks up the caulking gun and uses foam sealant, they can cut their bill by 15% to 20% just by doing these things. “