Natural Gas Should Remain Less Expensive than Fuel Oil
According to FERC’s Winter 2008/2009 Energy Market Assessment, while both oil and gas prices have fallen from their mid-year highs, natural gas prices remain well below heating oil prices on a per MMBtu basis.
This slide illustrates that on a British thermal unit equivalent basis, recent spot and current futures prices for gas are well below oil prices. Forward market prices now show that delivered gas at Transco Zone 6 NY averages about $10.50/MMBtu, representing about a $10/MMBtu discount to heating oil. This disparity in prices is affecting homeowner heating fuel decisions. Wachovia Research reports that NStar, which serves natural gas customers in Massachusetts, noted that inquiries about converting to natural gas from oil were five times higher during the first five months of 2008 than over the same period in 2007. At NiSource subsidiary Bay State Gas (also serving Massachusetts) conversion requests were up 97% for the same time periods. On Long Island, National Grid indicates that 12,000 homeowners had contacted it about switching to gas during the first seven months of 2008, more than double a year earlier.
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EIA: Retail Prices
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