Natural gas prices have been steadily rising in recent months. As a result, the New York Mercantile Exchange, which trades natural gas contracts and is used to price them, closed at its highest level in 12 years on Wednesday. That is terrible news for those of us who have been on Dominion’s Standard Choice Offer or SCO. The SCO for October has been set at $5.99 per thousand cubic feet, based on Tuesday’s pricing (mcf). It first broke through the $4 barrier in August, at $4.19/mcf, and again in September, at $4.52/mcf. For numerous years, the price had been stuck between $3 and $2.
It last broke $4 in December 2018, when it hit $4.79/mcf. However, it was just for a short time. You’ll have to go back to 2014 when costs were frequently in the $4-plus area. According to Vicki Friscic, director of regulatory and pricing for Dominion Energy Ohio, a regulated utility, the increase is due to several variables. She added that national gas stocks are below the five-year average, which is a standard benchmark and makes markets worried when inventories fall.
Our frigid winter and hot summer (due to the increased use of natural gas by electric plants) have also contributed to the smaller stockpile. Remember when the shale gas development was hailed as a boon to Ohio? Because of the quantity of natural gas in the system due to shale gas, we enjoyed lower costs for many years. However, due to growing worldwide demand and exporting of liquefied natural gas, prices have risen. When demand is low, and market prices for gas are every day, natural gas rig operators will deploy fewer rigs, forcing prices up, according to Chuck Keiper, executive director of NOPEC, Ohio most prominent nonprofit energy aggregator, which provides gas to 206 towns.