Dec 3, 2018 3 min read

Three dollars a day. If Russell Bedell is correct, that should be what it will cost to stay warm at home this winter.

Bedell, the Keystone State’s spokesman for Columbia Gas Co., said in an interview that the average monthly residential Western Pennsylvania gas bill was $92.12 in the last quarter of 2018, with similar bills to follow.

He discounted concerns that recent increases in the gas futures price would lead to higher bills. This lack of concern was shared by Vincent Cannady of Mt. Lebanon, a security guard, who found gas costs to be more than reasonable – especially because, as he put it, “they pay twice as much in Europe.”

On Nov. 14, the one-month-ahead gas futures price went up 18 percent on the New York Mercantile Exchange, the largest single-day gain since 2004, when the massive Marcellus Shale formation was discovered here. The jump was widely attributed to the pre-Thanksgiving temperature drop. The price in New York reached $4.83 for a thousand cubic feet.

A study by the U.S. Department of Energy found that natural gas bills actually could decline in the coming winter if the mercury registers numbers that are 10 percent warmer than forecast. A 10 percent colder weather event would lead bills to go up 16 percent.

Heating oil costs likewise were projected to move up substantially with 10 percent colder temperatures, despite the fact that the resource it is made from crude oil, whose price has recently fallen dramatically. It went from $82 a barrel on Oct. 3 to $50.39 on Nov. 23.

This reflected record American oil output, which, according to the International Energy Agency in Paris, stood at 11.65 million barrels a day in September and October. Similar overproduction took place in Russia and Saudi Arabia.

This growth was seen as necessary to offset the possible loss of Iranian exports after the United States’ Nov. 5 exit from the nuclear deal with Tehran. The super-producers also wanted to take advantage of elevated prices on the world market.

It wasn’t just the weather. Energy analysts listed a number of other reasons for the natural gas rise. One of these was the volume of gas in storage, 3.2 billion cubic feet, the smallest amount since 2005. This was unusual because American production during the gas “injection season” was 83.6 billion cubic feet a day, up from 74.7 bcf/d in 2017. Other factors limiting supply included the export of gas to Mexico through pipelines from Texas, and to overseas markets in Central and Eastern Europe, using liquefied natural gas tankers.

Gas rates usually decline due to lower economic growth. Slower output in the economy means less use of electricity, much of which is generated by clean-burning natural gas.

So far, this does not apply in the United States, where the gross domestic product grew 3.4 percent in the third quarter of 2018.

There is, however, downward pressure on American oil exports overseas, because of a strong dollar and slowing growth and energy consumption in the three next largest economies – China, Japan and Germany. The United States still exports more oil than it imports.

With its natural gas output, it is now the world’s new oil and gas superpower.

John Portella is a Pittsburgh-based freelance journalist who covers defense and energy issues. He earned an international relations doctorate at American University in Washington, D.C.