Question about GGE Pricing

[gottagetit]

I am in Oklahoma and we can get CNG for $.91 per GGE. I have tried to back into the numbers a bit to see where they are getting that price and I think some of my figures are a little off.

Natural Gas is trading for around $12 per MMBTU (million BTU's) If their is approx 115,000 BTU's in a GGE then that would equal 8.69 GGE per million BTU's. Which would make the cost per GGE around $1.38. I beleive this is before delivery or any other expenses. I know our local gas company is not loosing money so that I can buy cheap fuel. Can someone please tell me how my figures have gone wrong?

thanks

Nic

[Lakewood90712]

Re: Question about GGE Pricing

Regulated gas utility companies purchase contracts for gas to be supplied many years in the future . If you look ant the ANG index for the last 10 years , it's all over the place, but currently on a steep uptrend. long term , your rates will rise. The ANG index usually follows oil , but lags in time.

The utility can sell to certain sectors below cost , if approved by your state utility commision . Sometimes this is done in the name of "Public Purpose" .

Example: So Cal Gas (Sempra) Residential rate is a little under $1.00/ therm. , but the tarrif for gas to electric utilites for power production is $.45.

In both cases , the puc approved the rates , and the public can object , but seldom does.

Now the fact that so cal gas (Sempra Inc.) supplies gas to San Diego Gas and Electric (also Sempra Inc.), gas for electric power production at 1/2 of the homeowner rate looks like a windfall for the electric utility , but nobody complains loud enough. So the puc approves the rates requested.

In OK, your gas utility may also have it's own wells , and that can be a big factor , when it's drilling and production cost's , not gas purchased on the open market.

Your price / therm figures are close , using spot price gas. The conversion is about 1.25 thems per gge.

Many others on this forum have better info than I have, but that's my $.02 worth. Enjoy the low rates , they may not last.

[CraziFuzzy]

Re: Question about GGE Pricing

The stations are also getting .50/gge from the federal government in tax credits, so that $1.38/gge commodity price becomes 0.88/gge cost to the fueling station (assuming they are buying at commodity price, which is unlikely)

[Curtis]

Re: Question about GGE Pricing

You're not figuring in tax's, compression fee's, line transmission fee's and the like. It would be nice if it was that simple... or cheap.

[gottagetit]

Re: Question about GGE Pricing

I appreciate the info guys. If all of the gas is being bought up in bulk in advance how does an independent open a fueling station and compete? Or maybe that is why we dont see many independents. Any thoughts from you guys?

[freedml]

Re: Question about GGE Pricing

Anyone can buy all the gas you want. You can buy gas for delivery anytime over the next couple of years. Here's a link http://www.nymex.com/ng_pre_agree.aspx

[hoser_9]

Re: Question about GGE Pricing

So why are the rates in SoCal $3.29 per GGE? In San Diego at Peason Fuels they are that price?

[jetboatjohnny]

Re: Question about GGE Pricing

Because it is a Clean Energy station, they base their price on the price of gasoline not the price of natural gas, it's all about profit.

[Curtis]

Re: Question about GGE Pricing

So why are the rates in SoCal $3.29 per GGE? In San Diego at Peason Fuels they are that price?

Actually, cngprices.com shows Pearson at $2.99/gge. And it would appear that CE has no stations in San Diego. You might want to call Pearson Ford and ask them why their prices are higher than everyone elses. Prices dropped by as much as $.50/gge the beginning of August when the spot price dropped about $3/mcf. We should be seeing prices closer to $2 right now.