Consumers can take some comfort in the likelihood of slightly reduced natural gas bills this fall and winter.
Pacific Gas & Electric Co. projects that its residential gas bills will average $63 a month from November through March. They averaged $65 per month in 2008 and $78 per month the year before that.
The wholesale cost of gas has dropped sharply because of reduced demand during the recession and increased supplies from new extraction technology.
"Currently, our gas supply in storage is robust and plentiful," PG&E spokeswoman Nicole Liebelt said Thursday.
Residential gas use is highest in winter because it is the main means of heating homes in California.
The low gas prices also are helping to keep the cost of electricity in check. The Modesto Irrigation District this week canceled a major power rate increase in part because of the cost of gas, a key fuel for its power plants.
The MID is close to completing a gas purchase that would lock in nearly half its 2010 supply at a low cost, spokeswoman Kate Hora said.
"Certainly, what this results in is a very good deal for our ratepayers," she said.
Wholesale gas prices stood at $2.88 per 1,000 cubic feet as of Wednesday, down 80 percent from last summer's spike to nearly $14.
That does not mean an equal drop in customer bills, because wholesale prices are only part of the cost of getting the fuel to each home.
Still, the savings are welcome to people dealing with job losses or pay cuts during the recession. The prices, of course, could head back up as the economy starts to grow again and demand by industrial users increases.
Some questions and answers on gas:
Q: How has the supply grown?
A: Estimated U.S. reserves are 35 percent higher than just two years ago, thanks to new technology that has allowed producers to drill for gas in shale rock, the Potential Gas Committee in Golden, Colo., reported in June.
Energy companies can now drill down, and then sideways, for miles. As a result, reserves are at their highest level since the group started tracking the information 44 years ago.
Q: What has happened on the demand side?
A: The federal government expects consumption to decline by 2.6 percent this year, driven by a huge drop in demand from the nation's factories.
At the same time, summer weather for much of the country has been mild, reducing the use of gas-fired plants to make electricity to power air conditioners. There have been no hurricanes that disrupted key production areas in the United States.
Q: How long will prices remain low?
A: That depends on the wind, both economic and meteorological. Winter is on the way, and the recession won't last forever. Still, most forecasters expect a relatively mild winter, and the nation is still struggling to recover from the economic downturn. Odds are, a substantial rebound in prices is not going to happen soon.
But it's not out of the question. In the summer of 2002, as the country recovered from the last recession, natural gas cost $2.66 per 1,000 cubic feet. Then it got really cold. By February, prices had doubled, and then they quickly spiked to nearly $11, in part because of one-time events, including a huge fire at an oil and gas storage facility in New York.
The difference this time is the size of the recession (a lot bigger) and the size of our reserves (also a lot bigger).
"The fundamentals weigh against the potential for $10 gas," said oil and gas trader and analyst Stephen Schork.
Bee staff writer John Holland can be reached at firstname.lastname@example.org or 578-2385.