Historic levels of natural gas production are among factors leading to low prices in Southwestern Pennsylvania.

There are signs natural gas prices could stay low moving into next year.

Purchased gas prices for Pennsylvanians are down 9% to 65% compared to where they were last year, according to Pennsylvania’s Public Utility Commission. The two natural gas companies that service the Pittsburgh region — Peoples Natural Gas and Columbia Gas — are charging the lowest rates of any company the PUC tracks.

Peoples Natural Gas is charging $3.08 per 1,000 cubic feet of natural gas (Mcf), Columbia the equivalent of $2.88.

On top of the cheaper prices for natural gas, Peoples also is applying a credit to customers’ bills, thanks to a mild winter last year, spokesman Nick Paradise said. As a result, Peoples expects average residential customers to have monthly bills about $14 cheaper this quarter compared to last.

Both Southwestern Pennsylvania utilities’ prices are significantly lower than last winter, when Russia cut off natural gas to many parts of Europe. That caused a disruption in markets.

University of Pittsburgh regional economist Chris Briem, a Peoples customer, charted his payments on social media over the past year, and his rates in November and December 2022 were over $8 per Mcf.

Briem showed his commodity charge for this October at -18 cents per Mcf and for November at -71 cents per Mcf.

In addition to commodity charges, natural gas consumers still have to pay delivery fees to get natural gas to their homes.

So I can't speak to broader markets, but I just checked the math on my bill and yes, I am being paid to use natural gas (still have to pay to have it delivered). Has this happened locally in the past ever?

Corrected figure with the recent month values being negative. pic.twitter.com/DvmTv5yVFj

— ???????????????????? ???????????????????? (@chrisbriem) November 28, 2023

Jeremy Weber, a professor at Pitt’s Graduate School of Public & International Affairs, said in August 2022 that gas prices started to jump as Europe was struggling with natural gas supply as Russia cut off much of the continent. That set prices soaring, even in the United States.

Eventually, Weber said, the market was able to supply Europe, thanks to a boost from America sending liquified natural gas tankers to Europe. A warmer-than-expected winter meant demand was not as high as expected.

By spring, natural gas commodity prices began to decline dramatically.

“Everyone, not just Pennsylvania, saw a decline from $9 to $3 per Mcf,” Weber said.

Local factors also are keeping natural gas prices down in the Pittsburgh region, Weber said. The Appalachian region is producing natural gas at record amounts, he said. According to the U.S. Energy Information Administration, the Appalachian region, which includes Southwestern Pennsylvania, has been producing about 36 billion cubic feet per day over the last half of 2023.

“Because we are not having the same degree of drill and build that Pennsylvania and Appalachia had in 2011-2012, people tend to think the natural gas boom era is busting when in reality it has never produced as much gas,” Weber said.

Production growth is mostly leveling off in the region, he said, but other factors could keep commodity prices low, at least in the short term.

The region’s efficiency at shipping natural gas can affect commodity prices, he said. Currently, hold-ups in the construction of natural gas infrastructure, such as pipelines and storage, will keep local supply high and thus prices lower for consumers, Weber said.

“Regionally, we currently have strong production and limited takeaway capacity,” he said.

Another local factor is weather. Significant cold snaps will increase demand and could increase costs, Weber said.

However, the region already is lagging in snow totals, and a fairly strong El Niño means Western Pennsylvania will see above average temperatures, Pittsburgh-area meteorologists said.

So Weber implied customers should enjoy the low prices while they last.

“We have seen in different regions in the U.S. crazy low and even negative prices in extreme situations,” Weber said. “This is not unheard of, but it usually doesn’t happen for very long.”

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