Our local gas company is alerting us in advance that January is going to be rough:
The warning Southern California Gas Co. issued to its customers was unusually blunt: “There’s no easy way to put this,” the company said. “January bills are likely to be shockingly high.” Anyone who heats their home with natural gas is likely to see a January bill that is more than double what they paid a year earlier, SoCalGas said.
It's funny, though. I don't recall that natural gas prices have spiked recently. And they haven't:
So what's the deal?
SoCalGas and other utilities have attributed the sudden and dramatic surge in prices to unusually cold winter weather in California and the Pacific Northwest, which boosted demand for heat, as well as supply and distribution constraints.
The U.S. Energy Information Administration pointed to reduced capacity because of pipeline maintenance in West Texas that lowered westbound natural gas flows. The EIA reported that Pacific region natural gas storage inventories in December were 30% below the five-year average.
I dunno. It might be chilly out here, and Texas might have some pipeline problems, but over the course of two months we've gone from the same price as everyone else to 7x the national price? That seems to call for a little more detailed explanation, especially in a state that went through the whole Enron fiasco 20 years ago and is still pretty suspicious about these things.
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Screw the customers.
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Same issue with SDG&E
It's how prices seek their level when demand is more-or-less inelastic, supply is more-or-less limited, demand exceeds supply, and prices are unregulated.
In other words--it's the free market, Baby!
Is the supply more-or-less unlimited? That's the point.
Obviously, sure, if supply is limited then rationing will occur one way or another; by price or by fiat...
The point is to get an understanding of the supply limits. For example has there been pipeline damage? Or are the pipelines scaled to "normal" use levels and maxed out at that point, but the combination of slightly colder winter and a lot of rain (compared to the last five years or so) has meant substantially more demand than usual?
The final paragraph cited by Kevin addressed that point, but only in vague ambiguous terms. I, too, would like to see more specific data when some corporate giant is telling me why I'm about to get screwed.
I'll take colluding to price gouge for $1000 Alex.
I didn't know anyone in southern California had furnaces. Do you really need them? I'd think maybe a space heater here and there, or just close the windows if it's a little chilly outside.
Stoves and water heaters use natural gas, too.
Stoves and water heaters use small amounts compared to heating a home. It was that, specifically, that was cited in the scare-message from SoCalGas. See the first paragraph of the message Kevin cited.
"I didn't know anyone in southern California had furnaces. Do you really need them?"
Not if you don't mind shivering all night.
Most of California is a desert or mountain climate, and you better have heat or you'll be sorry. Even at the beach, the only place you might get by w/o AC, you'll still need heat for nights, late fall and winter.
Where I live, in L.A., it gets into the 30s often enough. Cold enough to scrape the frost off the windshield in the morning if the car's not in the garage.
Luckily, we converted to an electric heat pump and water heater about a year ago.
We just rebuilt our home from the ground up. It is all electric, no gas. The old home (near SF) was built in 1925. It had little insulation and was really drafty. The furnace ran all the time. In the new home the insulation is fantastic (foam insulation). We use just a little power in the Mitsubishi heat pump. Plus, it is a multi-zone heat pump so we just heat (or cool) the room we are using.
I’ve hear horror stories about families with sky-high gas bills because they have lots of kids who change their clothes multiple times a day. Each time the lightly used clothing goes in the wash then the gas dryer.
We have a Sanden water heater. Rather than halogen based working fluid it uses CO2 (R-744). Works great and is really quiet and compact. Since we have all LED lighting the power needed for lighting has dropped a lot.
Every house I know of in LA has a combined AC+furnace system that burns gas in winter.
Do you need it? Well that depends on
- how modern is the house? If it's more recent than, say, 2000, it probably has good insulation. But if it's from 1900 or 1940 (as many are)...
- how cold are you willing to be? You probably will not DIE of cold, but right now nights are between 40 and 50. You can just put on your warmest sweater (and in my younger, poorer, years that is indeed what I would do) but running the furnace is more pleasant.
Well yeah, but renewable energy sources are unreliable, you know.
Snarcasm aside, that is why CalIISO (et al) are so very anxious to have everyone curtail their electricity usage between 4 pm an 9 pm.
Looking at the likes of: https://www.caiso.com/TodaysOutlook/Pages/default.aspx and the Net Demand* on a cloudy and sometimes still day can be a sobering thing.
* what is needed beyond what renewables supply.
Well viable storage solutions for large-scale renewables may soon be a thing: a Dutch company claims that by using AI they have a much better idea of the solution space for 'electroactive molecules' that could be used in high-performance flow batteries. If this works out, maybe we can have an all-renewable energy grid. This bit of news starts around 10:20 and from there you can google, but I highly recommend that you watch the entire episode; the Hossenfeffer lady is entertaining as all get-out while simultaneously presenting science without the gobbledygook.
https://www.youtube.com/watch?v=pb0wgCbLLP8&t=9s
Our natural gas bill spiked too for this month, over and above what it usually is for this time of year (and we actually had the heat turned down to 60F for 2 whole weeks while we were gone for Christmas).
I'm guessing, like everything else in the Biden era, the energy companies have finally discovered that government will do nothing if they price gouge and call it "inflation," especially if they're essentially a monopoly.
If only we were drilling in ANWR! Or allowed Russia to take over Ukraine! Or something about offshore leases?! If only Biden hadn't shut down production in Pennsylvania!
If not for those things, this wouldn't be a problem. Way to screw things up Biden!
Nah, in this instance the CPUC et al were likely quite sufficient. For example see the link in one of my other comments here. Strikes me as getting what one wished for. Which in this case was no more natural gas infrastructure investment.
Kevin, I don't mean to be pithy but the answer to so many of your frequent questions are answered by one word. Capitalism.
If somebody wants to they could add "poorly regulated" as a qualifier to that and I wouldn't argue, but it's so pollyannish at this point to wonder why any company would charge above historical market value. Because they can!
Worst case scenario there will be a bunch of hearings and some CEOs will offer fake apologies, the company will receive a miniscule fine (that doesn't come close to the surcharges they already they grifted on) and there will be a minor change in regulations that result in them temporarily reducing their profit margins until they come up with a new grift and start the cycle all over again.
Preface "Capitalism" with "unreguated" and I'll be in complete agreement with you.
Capitalism gets blamed for a lot of our ills, but it's hard to pin the fault here on capitalism. Publicly regulated monopolies are the opposite of capitalism. There's no free market or competition. If there's a failure, it's not the market but government oversight, and a corruption of the process that makes effective regulation so difficult.
There is a challenge, with new investment. ESG, the broader political climate, means the oil and natural gas companies are materially reducing their investment in storage, new pipelines etc. Unfortunately, today, we still new these 'dirty' fuels....
The Henry Hug is a good way to track natural gas prices
typo its the Henry Hub (not hug)
Well, SCG may be monocle-twirling price-gougers, but I think I'd take that over PGE, who seems to like to blow up the cities that they can't burn down. Plus my power tends to go out about ever other month, even in good times.
What do you do when your utility monopolies break bad?
But Kevin, shirley when you remodeled you switched to a heat pump yes?
https://jabberwocking.com/every-american-should-have-a-heat-pump/
Queuing theory isn’t a great fit, but misapplying Little’s Law tells us that if utilization approaches 1 (ie pipeline capacity) the queue (price) grows exponentially.
What ever became of this: https://www.utilitydive.com/news/another-blow-for-california-gas-judge-rejects-proposed-pipeline/522752/
This is pure speculation but: Advances in materials science make thermocouple conversion not only practical, but preffered. That's the stuff of sience fiction though 😉 Don't forget, everything is constrained by the laws of thermodynames. Yes, even something as (possibly) unintuitive as the solar cell.
The Law of Thermodynames
No matter how many times you change your name, you cannot escape yourself.
Uh, excuse me? I have no idea what sort of meaning you're trying to impart with this comment.
This is a good explainer:
https://www.naturalgasintel.com/perfect-storm-fuels-massive-natural-gas-price-spikes-on-west-coast-northern-california-hits-55-mmbtu/
In a timely posting, something new to perhaps pry from the cold, dead hands of some: https://www.theguardian.com/environment/2023/jan/06/us-kids-asthma-gas-stove-pollution
We just (three months ago) bought a house whose kitchen had a (fairly pricy) gas-powered cooktop. We swapped it out for induction. My spouse and I had both grown up with gas, and had it in nearly every house or apartment we'd lived in, until the next-to-last one which had an electric cooktop. It was horrible. But rather than have gas installed when we remodeled the kitchen, we got induction instead. After a relatively small investment in compatible cookware, we decided we'd never back. So out went the fancy gas cooktop just as soon as we could manage. The level of control on a good induction unit is phenomenal, especially at the extremes (e.g. making custards, which need a consistent low heat, or boiling water quickly, where the more heat the better). No worries about indoor air pollution or heat wasted going up the hood vent.
I’ve always cooked on electric so was never spoiled by gas. My wife and I eagerly await the arrival of our induction cooktop.
By the way any suggestions as to compatible cookware?
We got a relatively inexpensive set of induction-compatible, multi-clad stainless steel cookware (aluminum for heat transfer sandwiched between magnetic stainless steel). Ordinary aluminum or copper based cookware doesn't work, and even some stainless steels aren't compatible (they need to be magnetic -- heating comes from the rapid reversal of magnetization, not electrical resistance as one might assume). To this we added a couple cast iron items -- fry pan, dutch oven -- and an induction-compatible carbon steel wok. (The latter has a somewhat flattened curve and a supporting ring that keeps it very close to the cooktop surface. We ordered it from a company in France; induction is much more popular in most of Europe.)
The initial cookware set was "Cooks Standard" ordered through Amazon, and over the eight years we've had it has held up remarkably well. It's Chinese-made. The cast iron was Lodge. Be aware that cast iron is pretty heavy stuff and will work best on the largest coil since it's not that good at heat distribution. If you drop or slam it on the cooktop you'll probably break the glass. I wind up using it a lot, nonetheless. I don't recall the company we ordered the wok from, though I seem to recall it being a fairly well-known French brand.
You want pots and pans that are magnetic, your cast iron stuff and the enameled cast iron for sure and high quality stainless steel clad cookware is also compatible, also carbon steel cookware. Old school aluminum won't work nor will copper cookware or glass non metal cookware. Me? I'd spring for fewer good pans than wasting $$$ on a cheapo set with stuff you don't need.
Yeah, if you're out shopping for cookware bring a small magnet. If it doesn't stick, it won't work.
Other than the double boiler we use every piece of our set (small frypan, large frypan, small, medium, and large pot, and lids). It's not unusual to have three of the set in use at once. I was a bit fearful that stainless steel clad aluminum would have separation issues but even after being overheated a few times there has never been an issue. But we tend to do fairly intensive cooking; just a good frypan and pot might be fine for others.
It's simple enough, the anti fossil fuels lobby is particularly strong in California. As a result there is little spare capacity which leads to price spikes when demand surges a little. There is a reason that this tends to happen more in California.