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Natural gas prices set to go down

natural-gasNatural gas prices set to go down
By Oregon Small Business Association

Some consumers are set to benefit from a poor economy, as all three Oregon natural gas providers requested reduced rates in filings sent to the Oregon Public Utilities Commission.  The companies, Northwest Natural Gas, Cascade Natural Gas and Avista Utilities asked for rate decreases ranging between 12.41 percent and 21 percent.  New rates will go into effect on November 1, 2009.

An economy in recession and an over supply of natural gas are reasons for the decrease.  Just a year ago Northwest Natural Gas requested a 14.3 percent increase in rates, Cascade Natural Gas a 5.4 percent increase, and Avista Utilities a 2.9 percent decrease.  This year Northwest Natural Gas is seeking a decrease of 14.5 percent for residential users and 17.5 for commercial users, Cascade Natural Gas a decline of between 12.41 and 18.58 percent depending on which payment schedule the customer is on and Avista Utilities a drop of 21percent.

The price declines are part of a national trend.  The Energy Information Agency (EIA) projects the total U.S. natural gas consumption will decline by 2.6 percent in 2009.  A substantial fall off in industrial activity drove the decline, as illustrated by a 17 percent year over year decline in the natural gas weighted industrial production index in the first half of the year.  Prices have fallen enough for natural gas to compete against coal for a share of the base load generation in the electric power sector.   Due to the drop in price natural gas usage for electric power generation for 2009 is expected to rise 2 percent.

With the drop in prices support for drilling has decreased also.   Working drilling rigs have decreased 58 percent since September 2008.  The EIA expects production of natural gas to stay flat in 2009 and decrease 2.6 percent in 2010.  Natural gas storage reached 3,000 billion cubic feet for the week ending July 24, 2009 the earliest day on record that inventories have exceeded 3000 Bcf during the injection season.