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My gas company's residential rates are currently about $1.23 per therm, or about $12.30 for a million cubic feet.
As you say, that's a lot more than the hub price of $4.45 mcf.
The $7.85 difference does include pipeline transportation, local delivery system, maintenance, storage, other overhead, taxes, etc.
If the price of gasoline were calculated by dividing the price of a barrel of crude by 42 gallons, gasoline would be valued at about $1.61.
It is quite possible that if natural gas prices stay down, as I think they will, the state utility commissions will require that the cost to the consumer be cut. There is more of a lag on the downside because the survival of the utilities requires that they petition for prompt rate increases when wholesale prices rise, but naturally they tend to make token requests to cut rates when prices drop.
But I think you are correct that consumers are currently paying perhaps twice as much as they ought to be paying. They are payingas if they were heating their homes with crude oil at $58 a barrel when you consider the BTU equivalent.
The really unfortunates are those still heating with oil, which is about the same as diesel. They are currently paying 50% more per BTU than natgas customers, and their costs track other distillates. |
