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Aug 21, 2009 -- Home heating expenses to be much cheaper this winter

CLARKONOMICS: In an era of bad economic news, there is one great side-effect that Clark has to report. What you pay to heat your home will likely be lower this winter.

Natural gas is the predominant method of home heating for most Americans. This clean-burning fuel is mostly domestically sourced and has a considerable oversupply of available inventory.

It's the complete opposite of what happened after Hurricane Katrina put a big crimp in supply and drove up the price. Four years later, the price has completely collapsed to around 28 cents per therm at wholesale. (Editor's note: Figure accurate as of Aug. 21, 2009.)

Meanwhile, the current supply is at such an all-time high that The Houston Chronicle reports sellers are running out of places to store their excess! At the same time, demand is down, particularly among industries forced to shutter factories because of the recession.

Natural gas has traditionally been used simply to heat homes, for cooking and for hot water. But with the air pollution problems associated with coal, more power companies have taken to building natural gas power-plants to generate electricity.

Now the power for your lights, TV and computer comes from natural gas at much lower prices vs. coal-generated electricity.

So if your power bill is not going down, somebody's ripping you off, according to Clark! Both home heating and normal electricity should be a lot cheaper now and throughout the coming winter.

Finally, Clark used to own a natural gas powered vehicle. But he sold it for a handsome profit at the height of T. Boone Pickens media push for natural gas powered vehicles. He intends to buy another one when prices on such vehicles become cheaper.

Unfortunately, Clark won't be able to answer any questions submitted via commenting. If you have a question, please try posting it to our message boards.

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What others are saying

  • Gas Fixed or Variable Rate
    My question is, for this winter is it better to go with the fix or variable rate?
  • Over-paying gas Utilities
    In an effort to cut costs on home heating, I contacted my City of Lawrenceville Gas to find out how a Senior Citizen could lower her gas bill. I was told as of 9/10/09 that although I only used 6 therms of gas, I was charged for 10 therms as that was the lowest the "City" could go! What kind of nonsense and/or insensitivity can the City of Lawrenceville show its residents?
    signed "really ticked off"
  • I sure hope so
    This will be good news if they actually keep the rates down. Last winter I paid an average of $300 a month for natural gas from Xuknowwho, and my home isn't that big and it's well insulated. And I can remember getting a rate hike notice with almost every bill last year. I did crank the central air more than normal this last month due to the high temps here, and did notice a cheaper electric bill compared to last year, hopefully this will carry over into the dreaded Wisconsin winter months with the gas bill. At what point will CAP and TRADE, or a better word would be TAX on CONSUMERS, at what point will this mess kick in and raise the price of both electric and gas? Do I need to start an emergency fund just for my future utility bills?
  • LP Gas
    Is there any relationship between the price of natural gas and LP Gas. We do not have access to natural and must use LP or electricity. What's the best way to go?
  • A lot of these utility companies are hypocrites. During high price times,they urge people to conserve energy to lower their costs and most people are in fact forced to conserve because of cost. Now that we are in a recession and people/businesses are using way less energy which in turn caused the prices to drop significantly, now utilities are trying to raise prices anyway because they claim they aren't selling enough energy so they have to make up the difference because of the low prices.
  • Natural Gas
    Is there a way to "hedge" natural gas costs and lock in current low prices for the next several years?
  • NV Energy
    Nice. Not only are our power prices not declining, NV Energy just petitioned the Public Utilities Commission in Nevada for a 17% rate hike!
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