Californians are expecting skyrocketing natural gas bills this month, but this can’t all be blamed on the weather, according to industry insiders.
Southern California Gas Company (SoCalGas), which serves about 5.9 million households and businesses, warned customers to expect “shockingly high” January bills that could be 128 percent higher compared to December.
Those who typically paid around $65 a month last winter are likely to pay about $160 this year, SoCalGas said in a statement Dec. 29. Those with bills around $130 a month could see charges jump to $315.
Last December, wholesale natural gas prices already cost five times more than that of 2021. The utility also paid unprecedented prices for the supply in January, the company reported.
Natural gas prices rose in 2022 for five reasons, according to a biennial report (pdf) published by California Gas and Electric Utilities, a group of utility providers including SoCalGas, San Diego Gas & Electric, and SoCal Edison.
First, North American inventories fell below the five-year average last year. Second, the national supply was also strained by Europe’s steady demand for American natural gas during the Ukraine conflict.
Third, the Biden administration restricted licensing and drilling in the country for fossil fuels, and investment for such production has lagged behind the rapidly growing demand for natural gas over the past year, according to the report.
Lastly, the growing electric power sectors nationwide also consume natural gas, the company reported.
“From an economic standpoint [reducing reliance on fossil fuels] may be costly and is certainly not expected to be rapid or easy,” the utility reported. “Nonetheless, the push to find ways forward and to provide energy solutions to customers in a clean and affordable way is an imperative.”
Climate Goals Restrict Production, Grow Demand
Besides the recent storms that have crimped national supplies, California’s poor storage planning and aggressive climate action goals played a part in driving the prices skyward, Mike Umbro—an oil and gas developer in Kern County, about 150 miles north of Los Angeles—told The Epoch Times.
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