Gas Prices Return to Normal

The price of natural gas has returned to normal after a recent upsurge.

Residents may have noticed a higher gas bill for December after using gas-fueled heaters during the cold weather. The dramatic increase prompted a city council discussion.

The Long Beach Energy Resources Department (ER) – formerly known as Long Beach Gas and Oil – also posted a memorandum to its website. The memo explains the 2018-19 winter seasons’ price fluctuations were caused “primarily to ongoing pipeline maintenance and storage issues on the SoCalGas system, which has caused sharp increases in the wholesale cost of natural gas at the SoCal CityGate hub.”

The memo states the factors which contributed to the price fluctuations include:

Several SoCalGas pipelines operating at reduced or limited capacity due to planned and unplanned maintenance activities.

Decreased availability from SoCalGas underground gas storage inventories due to operating limitations placed on its storage facilities as a result of the 2015 gas leak at the Aliso Canyon storage facility. Storage inventories this 2018-19 winter heating season are at the lowest levels in more than a decade.

A recent explosion on a pipeline that delivers gas to Northern California has increased demand resulting in Northern California utilities competing for gas in the Southern California market.

As a result, the cost of wholesale natural gas increased greatly in December and Long Beach gas customers had to pay more for burning the fuel – especially when using more of it to stay warm.

Prices fell back in January and February. March is normal.

“It’s been quite a wild ride,” said Tony Foster, business operations manager for the Long Beach Energy Resources Department, during a phone interview March 8.

Foster said ER did its best to explain the situation to its roughly 155,000 customers. He added if a price spike happens again, ER will have improved systems in place to get the word out in a timely manner.

He said any customers struggling to pay a high bill can contact ER to arrange a payment plan.

ER also offers “level pay plans” where a yearly gas bill is averaged over 12 months, usually resulting in lower payments for the winter months.

Foster said the city’s ER does not sell gas to its customers with added costs.

“The price that we purchase gas is the price we charge,” he said. “There is no markup. And that’s the law.”

A repeat of December is not expected to happen again any time soon.

“But I always give a caveat,” Foster said. “We cannot control the commodities market. It’s a very volatile market.”

He said ER has many mechanisms in place and to date has done a very good job of managing the vulnerability, but that “These types of things can occur.”

“We cannot say it will never happen again; it’s unlikely that such a variety of factors would all occur at once,” Foster said. “But it’s possible. It’s possible that this won’t be the last time ever that price is spiked – but they are very few and far between.”

kirt@beachcomber.news