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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: Real Man who wrote (25160)	12/3/2009 4:28:54 PM
From: axial	Respond to of 71475

"In other words, NG is not a free market per se, consumers don't pay free market prices." Exactly! You can live right beside a natural gas pipeline, and have little hope of ever using it. First come the regulatory problems - national, federal, state, province, wholesale, retail. Expansion of distribution requires a long projected lifetime to recover large capital costs: not only for pipelines, but especially in municipal areas. Moving NG as CNG involves associated energy costs: compression, transport, pumping, storage, cooling. So you can't bypass the problems of NG by using CNG. As you note, incumbents have not been dislodged; they hold a preferential position in the hierarchy. Taken together these factors constitute tremendous inertia and resistance to quick change in the NG market. Jim

To: Real Man who wrote (25160)	12/3/2009 5:35:36 PM
From: Horgad	Read Replies (1) \| Respond to of 71475

So are you buying utils?

To: Real Man who wrote (25160)	12/3/2009 5:40:54 PM
From: Tommaso	Read Replies (1) \| Respond to of 71475

piedmontng.com 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.