What’s behind California’s spiking natural gas prices?
What’s behind California’s spiking natural gas prices?
Consumers in many parts of the U.S. are paying sky-high prices for natural gas. But that’s especially true in California, where some ratepayers report paying twice — and in some cases nearly three times — what they were paying at this time last year.
In this era of higher costs for seemingly everything, Joshua Fields recently did an audit of his finances.
“And I realized my gas bill was upwards of $300,” he said, adding that that’s compared to about $125 a month around the same time last year.
Fields lives just outside of Sacramento, California, and gets his gas from PG&E. His family started trying to conserve.
“We put up plastic sheeting to kind of help insulate the house a little bit more. We bought an electric heater,” he said. “The gas bill was the same price.”
Utilities make money from delivering — not selling — the gas itself, per Juan Alvarado, senior director of energy analysis at the American Gas Association.
“We would prefer if natural gas prices were as low as possible,” he said. Because when prices are high, “we don’t make a single cent on that.”
PG&E and SoCalGas, two of California’s largest utilities, cite increased demand due to unusually cold weather as one reason for the spike.
Supply constraints also drove West Coast natural gas prices more than eight times higher than those in the middle of the country, according to Severin Borenstein, professor at UC Berkeley’s Haas School of Business.
“The problem is that the pipelines that can carry gas from the rest of the country to the West Coast were completely full,” he said.
That meant there wasn’t enough room to transport more gas from cheaper regions. “At the same time, the West Coast had less gas in storage than it has had in past years,” Borenstein added.
But consumer advocates suspect that there’s more behind high prices than basic supply and demand. California Governor Gavin Newsom is calling for a federal investigation into whether market manipulation, anticompetitive behavior or other factors are behind the price spike.
Stories You Might Like
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
