Natural-gas prices likely to stay low

Weather forecasters are predicting high temperatures around 50 degrees beginning Wednesday. So, when the guy who runs the utility that produces the fuel that heats your home says that he expects staying warm this winter will cost less for the average Utah household, that's a good thing, right?

Speaking Tuesday to the Deseret News editorial board, Questar Gas Co. president and chief executive officer Ron Jibson said going into this winter, "we anticipate and project that … natural-gas prices will stay low.

"That's based on abundance (and) storage being ahead of schedule across the country," he said.

Jibson said last year utilities like his were anticipating natural-gas prices to remain high but found that commodity market volatility forced natural-gas prices down drastically almost overnight.

"Back during '08, natural gas was considered something that was going to continue to be a strong player in the energy market in the country," he said. "Then what happened was we went through a warmer-than-usual winter, we had demand (decrease) again this summer and we saw demand down because we had a cooler-than-normal summer across the country."

He noted that lower electricity demand also led to lower demand for natural gas because so much of it is used for "natural-gas-fired electricity generation" in some regions of the nation. The result is large stores of inexpensive natural gas.

"It has created … an oversupply of natural gas (with) demand being off a little bit, and so prices fell with that."

So much so that in April Questar announced a one-time $50 million rebate to customers that reduced the typical customer's May natural gas bill by $40 to $45. At the time, Jibson attributed the rebate to the decreasing cost of natural gas due to nationwide economic conditions.

Despite those challenging conditions, Questar actually has been able to maintain its level of natural-gas production over the years with less manpower, mostly because of improvements in technology, Jibson said.

"We're operating with 30 percent fewer people today than we were in the late '80s," he said.

Jibson said that while the possibility does exist that prices could unexpectedly increase during the cold-weather months, the current scenario would seem to make that situation unlikely.

"We're at very low prices right now — 26 percent lower than we were last year at this time in our rates," he said.

"It's good. Good for the consumer."

e-mail: jlee@desnews.com