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Natural gas prices to drop in Chambersburg

November 30, 1999|By DON AINES

CHAMBERSBURG, Pa. ? After Hurricanes Katrina and Rita sent natural gas prices to historic highs in 2005, Chambersburg's more than 5,000 customers will see lower prices, although Mother Nature could send demand higher, Gas Department Superintendent John Leary said.

"Rita was actually a little worse. It took out, at one point, 80 percent of Gulf production," Leary said last week. That was 16 percent of total domestic natural gas production, he said.

The damage to rigs in the Gulf of Mexico sent the wellhead price for a dekatherm ? 1,000 cubic feet of gas ? to $15.80 at one point, Leary said. With no major hurricane damage this year and most of the lost production back on line, December natural gas is $7.76 per dekatherm, he said.

On top of the wellhead price, the borough has to pay transportation costs and charge a distribution fee to customers to pay for department operations, Leary said.

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About 4,400 of the borough's approximately 5,100 gas customers are residential, and in November 2005, they were paying about $1.80 per unit, or 100 cubic feet, of natural gas, Leary said. This winter, the cost will be in the range of $1.10 to $1.20 per unit, he predicted.

All things being equal, Leary said that should translate into considerable savings for the average customer, but 2005-06 was a mild winter, with January the warmest on record, keeping demand low during a period of high prices.

"That really bailed out our customers," Leary said.

If the winter of 2006-07 is colder than last winter, however, demand will increase, eating into some of the savings customers realize from lower prices, he said.

Only two municipalities in Pennsylvania own their gas utility, Philadelphia being one and Chambersburg the other, Leary said. According to the proposed 2007 budget, Chambersburg has the lowest natural gas prices in the state, and last winter, its prices were up to one-third lower than private gas companies serving the area.

Gas also is a bargain right now compared to heating oil, Leary said. Oil is selling for more than $2 per gallon, but would have to be $1.40 per gallon to be competitive with natural gas, he said.

There is good news and bad news about the future for natural gas users, Leary said.

"There's tons of it out there," Leary said. "Much of it is inaccessible."

The reasons, however, often are political, rather than technological.

There is plenty of natural gas to be tapped in the eastern Gulf of Mexico that could be put on line quickly, Leary said. Although not within 100 miles of the Florida coast, environmental concerns are an obstacle to drilling, he said.

Leary noted that despite the hurricane damage to oil and gas wells in 2005, there were no major oil spills or gas leaks in the gulf.

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