If natural gas under $1 per therm | Utility bill impact

The United States has benefited from hundreds of billions of dollars being spent on drilling for natural gas and oil over the last several years. There has been fracking, off-shore wells, and other investments made. Some experts are now predicting that the price of natural gas can go to a record low of $1 per therm or even lower as a result of this. So what will happen to your monthly utility bill if this occurs?

Unfortunately it is impossible to say, but your monthly bill should be lower in the future. The price per therm in the mid 2000s was over $10 in many parts of the country. So that means that over the last decade the total cost is about 10-20% of what it was. The reduction is strictly the result of all the investments that have been made in the energy industry in the US.


Many people may wonder why, if the price per therm is about 10% of what it was several years ago, why are their utility bills so expensive? Why are not they down to 10-20% of the past, and if natural gas is so cheap, where are their benefits? They also are curious as to what may happen if the price does go down to $1 per therm. There are no easy answers to these questions.

What people currently pay for their utilities (whether it is heat, gas, electricity, etc.) is not just made up of the price of fuel. The utility companies in the United states have significant overhead that also goes into the cost of your utility bill. So these companies need to maintain power lines, pay their employees, mail out monthly bills to households, and they have tons of other expenses.

Almost all of the major energy companies in the United States are for-profits as well. So they need to ensure their shareholders receive returns on their investment. However for those that use local cooperatives for power, they may expect to see a bigger reduction in their electricity rates if and when the price per therm goes under $1.

We give the same advice for any budgeting type situation. We tell people to plan for the worse and hope for the best! So when this comes to the cost of your electricity, never plan on the price per therm going to a $1 or lower. Do not plan on these energy companies all of a sudden dropping your rates.

Instead, you should budget for your bill to be the same in the future as it is today. Or, even better, plan on your bill going up a few percent each year. This will ensure that you budget properly and factor in utilities into your monthly expenses. The fact is no one knows what will happen in the future, particular when it comes to unpredictable energy costs. A war, oversupply so cut in investment (which is happening right now), infrastructure problem or any one of thousands of things could happen. The $1 per therm price of natural gas may never hit or benefit you.

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