Kansans will pay more for natural gas this winter
Remember those high gas bills last winter — the result of frozen wells at supply sites during the Polar Vortex storm that started in early February — that led the Harvey County Commission to declare a state of emergency in the county and some cities to seek low interest loans from the state?
They resulted in lawsuits by school districts and proposed surcharges from ultilty providers. The cost of gas spiked from $3 per MMBTU to $622 for members of the Kansas Municipal Gas Association — a group of 49 cities. Wellington is a KMGA city.
The effects of that linger — and very well could mean higher prices for heat this fall and winter.
Natural gas prices currently run nearly double what they did a year ago and experts predict the increased prices to last at least through the winter.
Utility companies pass the cost of natural gas directly on to their customers. As the price of wholesale natural gas increases, so will the fee your utility charges every month.
For Kansas Gas Service customers, that fee this month is $5.67 per thousand cubic feet of gas used. Last October it was only $3.76.
Other large gas utilities have made similar increases.
The Atmos Energy gas purchase fee this month is nearly $1.50 more than last year. At Black Hills Energy it’s more than $3 more.
“Right now, what we see is a relatively tight market, and higher prices signalling that more (gas) supplies are needed on the market,” said Richard Meyer, vice-president of the American Gas Association that represents natural gas utilities.
The U.S. Energy Information Agency said a few things are causing strain on natural gas supply that contribute to higher-than-normal natural gas prices.
First, the amount of gas in underground storage is lower than normal. That’s partly caused by February’s winter storm that set record cold temperatures for much of the central U.S. It’s also caused by increased usage by gas-fired power plants during a particularly hot August.
Hurricane Ida also cut natural gas production and supplies.
While the EIA expects many of those supply issues to get resolved, it said the price will likely remain high all winter.
If it does, the average Kansan could see a monthly bill increase as much as $100 higher than last year.
Kansas Gas Service spokeswoman Dawn Tripp said the company has several tools to help keep the cost of gas down even as market prices rise.
The company has purchased and stored large amounts of gas this summer when prices were generally lower. It also will enter into long- and medium-term contracts to try to lock a price in and hedge against future increases.
“By doing that, we’re able to place a price cap on a portion of our winter supply,” Tripp said.
Increased natural gas prices will also greatly impact Kansas farmers. Natural gas is the main ingredient in nitrogen fertilizers. When the price of gas goes up, so does the price of fertilizer.
“Fertilizer is the largest direct cost (for farmers),” said Mark Nelson with the Kansas Farm Bureau.
Higher fertilizer prices will mean thinner profit margins, he said.
Last year the price to put fertilizer on no-till corn was $60 an acre. Nelson said many people are preparing for that cost to double.
“That’s a lot of money just for that one cost input,” Nelson said.
— Chad Frey, Newton Kansan, contributed to this report. Brian Grimmett reports on the environment, energy and natural resources for KMUW in Wichita and the Kansas News Service (ksnewsservice.org). You can follow him on Twitter @briangrimmett or email him at grimmett (at) kmuw (dot) org. The Kansas News Service is a collaboration of KCUR, Kansas Public Radio, KMUW and High Plains Public Radio focused on health, the social determinants of health and their connection to public policy.