Talk about curiosity! When one area resident read this month's PPL electric bill, he was amazed – it had gone down.
Not only had the bottom line gone down – that was understandable due to the warmer temperatures – but in the fine print, he saw that the portion of his bill that covered the cost of generating electricity went down nearly 20 percent, from March's 8.48 cents to April's 6.89 cents per KWH.
Realizing that these numbers specifically apply to the electrical bill, which uses Dominion Energy Solutions as the electrical generation supplier, and is separate from PPL's distribution of the bill, PPL was contacted to see what gives.
According to PPL spokesman Kurt Blumenau the warm winter and the high levels of production of shale gas has led to lower prices for natural gas, so that electrical generators who use natural gas have lowered their prices accordingly.
According to National Public Radio, "There's a boom in natural gas production in the United States, a boom so big the market is having trouble absorbing it all."
Many Marcellus shale gas companies purchased three-year leasing rights in Pennsylvania and surrounding states. Their leases expire if they don't drill so, they are drilling just to maintain their rights.
If production continues at its current rate, the U.S. runs the risk of running out of places to store the natural gas. This may happen because even if the price of natural gas drops to zero, there's still money to be made in recovering "wet gas," that includes propane and butane which can be stored as liquids, and ethylene, propylene and butadiene – chemicals used in the production of plastics. Chesapeake Energy is moving half its drilling rigs for dry natural gas wells into wells that produce both wet and dry gas.
The U.S. Energy Information Administration listed total gas inventories at nearly 2.5 trillion cubic feet, a record high for this time of year, 56 percent above last year and 59 percent above the five-year average level.
Natural gas prices are at a 10-year low, currently at under $2 per million BTUs, down from a January 2006 spike of $15 per million BTUs.
In response, power generation companies are cutting back on coal and increasing the use of natural gas for power generation. As a result, the share of U.S. power generation fueled by natural gas will increase from 24.8 percent in 2011 to 27.1 percent in 2012, as the share of electricity generation from coal drops from 42.2 percent to 40.4 percent.
Net U.S. natural gas imports dropped to their lowest level in 20 years, from a 2001 high of 10 billion cubic feet per day to under 6 b.c.f./d – mostly imports from Canada.
In 2006, the cost of equal amounts of energy cost about the same for natural gas as it did for gasoline. Currently, gasoline costs 12 times as much. This cost difference has fleet operators scurrying to convert their trucks to natural gas.
Harrisburg has caught the natural gas fever with legislation in the pipeline to allocate $6 million per year, for five years, out of the state's Clean Air Fund, to subsidize the cost of converting trucks to using natural gas. Sponsor, Rep. Stan Saylor, R-York, justified using the Clean Air Fund because natural gas is cleaner-burning than gasoline.
The conversion to natural gas vehicles has started. Waste Management is converting its 1,400 North American diesel fleet to run on compressed natural gas. AT&T announced that it is converting its 275 diesel fleet in Connecticut to compressed natural gas.
Energy speculators feel that the short term hope for natural gas producers is for a hot summer – with a significant demand for air conditioning. If that happens, the price of natural gas will rise slightly.
Unfazed by the current glut of natural gas, a Chesapeake Energy spokesman noted that the current natural gas boom is a Field of Dreams build it and they will come.