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Natural gas prices expected to fall in Chambersburg

September 26, 2007|By DON AINES

CHAMBERSBURG, Pa. - Natural gas prices skyrocketed after Hurricane Katrina damaged natural wells and transmission systems in 2005, but recovery of the industry followed by a mild winter in 2006-07 should give Chambersburg residents a break this winter.

The price of heating a home with gas, assuming a normal winter, should be about 5 percent less than the winter of 2006-07, Gas Department Superintendent John Leary told the Chambersburg Borough Council this week. Additionally, gas bills for the 5,200 borough customers average 23 percent less than those of comparable private gas customers outside the borough, he said.

The borough has not changed its gas rates, the cost customers pay for operation of the system, since 1995, Leary said. What does change and is passed on to the customer is the cost of the gas itself, which the department buys in bulk from the Municipal Gas Authority of Georgia, he said.

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After Katrina, which severely curtailed production in the Gulf of Mexico, the futures price for a dekatherm of natural gas, about 1,000 cubic feet, rose to $15.80, Leary said. Prices on the "day ahead" and spot markets sometimes were much higher, he said.

As of Tuesday afternoon, the price of a dekatherm on the futures market where the department purchases much of its supply was $6.32, Leary said.

For all of 2006, borough customers paid an average of $1,008 - about $84 a month - for gas service to heat their homes, as well as for domestic water and cooking, Leary said. With three months left in the year, he said the average bill should be less than $1,000 for the year.

A mild winter kept demand low and supplies adequate, Leary said Tuesday. Despite the fact that drilling has doubled over the last five or six years, production barely has increased because the gas reserves that were easy to get to have been tapped, he said.

"We're treading water," Leary said.

The problem of supply is, to a large extent, political, Leary said. Large proven reserves in the eastern Gulf of Mexico off Florida, off the Atlantic and Pacific oceans, and in the Rocky Mountains are politically off limits.

"Florida wants huge payments in exchange for any drilling" off its Gulf Coast, Council President William McLaughlin said. At the same time, that state's demand for power is increasing fast.

While natural gas is a limited resource, "There's a lot of it out there if they'd let us get to it," said McLaughlin, who added that the nation should resume building nuclear power plants.

"The rest of the world has gotten over Three Mile Island and Chernobyl," McLaughlin said. "We still have people watching 'The China Syndrome.'"

The borough has about 63 miles of gas mains and 50 miles or more of service lines to homes, businesses and industries, Leary said. This year, the department replaced about one mile of mains, and plans to replace 1 1/2 miles in 2008, he said.

Gas line work next year will include portions of Cleveland, Fifth, Fairground and Grandview avenues, and sections of Cedar, Hazel, McKinley, North Fourth, East King and High streets.

A higher pressure line also will be installed from the area of Franklin and King streets to the site of the new U.L. Gordy Elementary School now under construction, Leary said. Ninety-seven percent of the cost of that line will be paid for by the Chambersburg Area School District, he said.

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