Understanding Natural Gas Savings

Natural gas is competitive, making planning and budgeting easier. It is clean and environmentally friendly, therefore, reducing maintenance and service costs. Also, natural gas is efficient, so you get the most for your fuel dollar.

Natural Gas is injected into the pipeline system throughout the Continental United States and delivered to millions of customers throughout the country. The majority of natural gas comes from domestic production, with the remaining supplies imported mainly from Canada, and other storage facilities located throughout the United States. Domestic production and imported natural gas are enough to satisfy the summer demand, but during the cold, winter months, additional supplies from storage facilities are necessary to meet the increase in demand. Therefore, storage is a key factor in the cost of Natural Gas.

Natural gas exploration and development has increased significantly over the past few years, but with the addition of gas-fired power generating facilities, new home construction, and increased use of natural gas resulting from conversion from other energy sources, so has the demand increased for natural gas. Therefore, production and demand are key factors in the cost of natural gas.

Weather forecasts are used as a guideline for the amount of natural gas injected into storage facilities, but forecasts are usually uncertain and changes to key factors used to establish the levels of storage could significantly affect the market cost of natural gas. Weather forecasts and storage levels are affected by the following:

• Prolonged cold spells or below normal winter weather.
• Problems that may occur when large users of high-cost competing fuels, such as power generating facilities or individual customers, switch to natural gas thus increasing demand.
• Any disruption of the pipeline delivery system or production facilities can affect the availability of deliverable gas.

The cost of Natural Gas is primarily based on two main components:

• Commodity Cost – The cost of natural gas itself. Frontier Gas Company passes the commodity cost of natural gas to you without any additional markup. Our cost of natural gas is your cost of natural gas.
• Transmission Cost – The cost to move natural gas by pipeline from its source to Frontier Gas Company’s interconnect with the interstate pipeline, namely the Transcontinental Pipeline (Transco).

For current information on Natural Gas Costs and Futures, please visit eia.gov.