Natural Gas Concern

Like most of you, I am strongly in favor of passing the Natural Gas Act since I feel that gas is plentiful and it is a good alternative to home heating oil and gasoline for buses, trucks and cabs etc. However, my understanding is that Natural Gas is currently scheduled to be fully deregulated in 2011. My utility, owned by Exelon, is already warning business and residential customers that natural gas prices as a result will significantly increase. They are so certain of this that they are currently telling their customers to voluntarily add 10% to their bill each month, which they will invest at a 5-6% interest rate for the customer, to help soften the blow of the increased cost. If we are going to encourage passage of the natural gas bill, shouldn't we have some assurance that utilities aren't going to significantly push up natural gas prices in 2011?

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Permalink Reply by Wayne J.R. Bowser, LEED AP on September 16, 2009 at 7:51am: Great discussion topic, Mr. Tortorello. I just had a similar comment from a friend here in CA that he does not support the use of Natural Gas because of the projected rise in prices as a result of higher demand...let's face it, energy prices are going to rise and we must deal with the notion of not relying on foreign supplies.

Please tune in to my program today, The Green Revolution Show, as we will be discussing H.R.1835. Jeff Green, Florida State Leader in the Pickens Army will be on the show. His company is Wise Gas...please join us in the conversation!; ▶ Reply to This

Permalink Reply by James C Orr on September 16, 2009 at 9:19am: The way I see it an increase in inevitable, history can prove that. We can spend more here or spend more overseas. The decision falls on us and how we plan to move ahead for the future of this nation. I would much rather see the increase going to the cause of providing clean burning natural gas for the United States with the proceeds staying in our nation rather than to see the majority of the funds spent to buy foreign oil from countries who have us on their list of nations they would prefer to see collapse. We need this in a desperate way. Our children need this.; ▶ Reply to This

Permalink Reply by Mike Johnston on September 16, 2009 at 12:05pm: Another way to look at it is introducing competition into the market. Right now coal controls most power production. If we introduce natural gas, solar, solar thermal and wind to the mix the rates should be more likely to go down.

Downside at present is that utilities have something of a monopoly in their area. The way to fix that problem and restore true free market price competition in that sector is to allow customers to choose their service provider just as they do with telephones.; ▶ Reply to This

Permalink Reply by Nicholas J. Tortorello on September 16, 2009 at 12:42pm: Mike, if we truly had a free market then price competition between utilities might work. However, even if you choose a different local utility the price differences are mainly pennies or just a few dollars. Just look at the telephone industry, even though ATT was broken up years ago - the price differences and calling plans between Verizon, Sprint, and the current ATT are fairly negligible. Although price-fixing is illegal each company knows what each other charges, and they know below a certain price point they would all lose money so they hold a certain pricing line. The same is true in the cable business.; ▶ Reply to This

Permalink Reply by Mike Johnston on September 16, 2009 at 3:15pm: HI Nicholas,

I have thought about this a bit so by replying I am not disagreeing with you, just expanding the concept based on your points.

When telecom was broken up several things happened. The land line industry pretty much settled on a standard pricing structure as you suggest in your post. However, the other thing it did was to spur the development of new technologies and delivery methods which, in some cases, enable consumers to purchase equal service via different sources.

The easiest pint is long distance phone cards. You can use them to talk to almost any point in the world for a fraction of the cost of using your normal carrier. This could translate into energy buy buying unused off peak power in one area and selling that to consumers in higher priced areas or during peak times.

Another thing that developed was cell phones. They went totally outside the existing phone transmission network and built their own. This also can translate to energy. I know cell phones have not been cheap but there are services now which are going in that direction, like Boost Mobile.

Finally there is Vonage. They too jumped on a different platform bypassing both cell and land line phones and created a new service that gives service as good as either of the other options. For $24 a month. No matter where you call or for how long...

This is the same kind of technology development that could happen in the energy/alt energy area if the same market was created.; ▶ Reply to This

Permalink Reply by Nicholas J. Tortorello on September 16, 2009 at 3:40pm: Mike, I agree with your specific points and that it could also happen with energy eventually as you suggest.. However, I am still concerned that deregulation in 2011 will spike natural gas prices for at least a few years, until Wind, Solar, Geothermal etc. become more competitive and prevalent. I am afraid Boone and other natural gas supporters in the interim will get severely blamed and criticized for the predictable price increases. Time will tell if I am correct.

I guess this also suggests that natural gas stocks might be a good investment over the next few years, and at least we will prevent some dollars from going to the Middle East for oil. Also, feel free to call me "Nick".

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