A Breakdown of Natural Gas Cost Per Therm by State


What does natural gas cost per therm? Do natural gas costs per therm vary by state? The cost of natural gas per therm can vary depending on location and other factors. The average natural gas cost per therm is $0.95 or $9.52 per thousand cubic feet. One therm is equal to 100 cubic feet of natural gas. Most households use natural gas for heating the home, heating water, and appliances. Natural gas is recognized as a clean burning fossil fuel that puts out fewer emissions than burning coal or petroleum products. However, as a natural resource, we should try to conserve natural gas as much as possible. Last year, 2020, we saw natural gas prices drop, but they appear to be rising again. Keep reading to learn more about natural gas and current costs1.

What is natural gas?

Deep beneath the earth’s surface, natural energy is formed. In its natural state, natural gas is colorless and odorless. However, natural gas is typically not used in its pure form. Natural gas is usually processed and converted. During the process, many by-products are extracted. The by-products can be repurposed for other uses. Most commonly, natural gas is used for generating electricity and heat. As one of earth’s cleanest fossil fuels, natural gas is extensively used in residential, commercial, and industrial settings. Natural gas prices are usually determined by demand. Seasonal changes may cause demand to fluctuate.

What is a therm?

According to the EIA, “Therm is the unit of measurement for your natural gas use over time.” A British Thermal Unit (BTU) is the amount of heat required to increase the temperature of one pound of water by one degree Fahrenheit. Most natural gas bills will use therms but for comparison, one therm is equal to about 100,000 BTU’s. The rate you pay per therm can vary depending on your location, provider, and demand. Weather, appliances, and other factors can impact the amount of gas you use2.

How much is a unit of natural gas?

Natural gas prices can vary depending on location, They can also vary depending on the season. As demand increases, the cost of natural gas usually increases as well. Since it’s a natural resource, there is no incentive for consuming more of it than your neighbor. In the United States natural gas is typically priced in dollars per MMBtu, dollar per cubic feet, or dollars per therm. The national average for natural gas in January 2020 was $9.52 per thousand cubic feet3. Natural gas has to be shipped and stored, which is why location can impact cost. In places such as Hawaii, natural gas may be more expensive.

What is the cost of 1 MMBtu natural gas?

1MMBtu of natural gas should cost about $3.354.

Why is natural gas so cheap?

Compared to other energy sources, natural gas is very affordable. Natural gas prices for 2020 were historically low but rose in the second half of the year. In America, we have an abundant source of natural gas which drives prices down. Technological advances have allowed us to have access to more resources such as natural gas. As we are able to produce more natural gas, prices are predicted to become even more affordable5. In addition, as alternative energy sources become more popular, the demand for natural gas may decrease in the years to come. The combination of increased supply and decreased demand should lead to lower prices6.

Is fixed-price natural gas worth it?

Fixed-price natural gas may have a higher average but allow you to avoid seasonal spikes. In the long run you’ll probably save money with fixed-price natural gas. In addition, your monthly electricity bill should be more manageable. Variable-rate plans fluctuate in price depending on the market rates.

Will natural gas prices go up in 2021?

Natural gas prices are expected to slightly increase in 2021 after declining in 2020. The recent pandemic caused a large portion of our economy to shut down. The temporary decrease in demand for natural gas may have caused prices to drop. As our economy re-opens demand begins to rise again, which could be why we are seeing an increase in price. As we mentioned earlier, in the long term we expect to see a decrease in natural gas price due to technological advances. However, it will likely take 20+ years for these predictions to be proven.

Is natural gas cheaper than electricity?

The average price of natural gas is usually cheaper than electricity. While gas appliances may be more expensive, they may offer more long term savings. Since gas is usually cheaper, a gas furnace should be cheaper to operate. However, electric furnaces may be quieter and safer. If you live in an area prone to power outages, you may be better off with gas appliances. Gas appliances should continue to work even in the event of a power outage. When choosing between gas or electric appliances you should consult a professional to make an educated decision. There are pros and cons for gas and electricity.

How much does natural gas cost monthly?

In many households natural gas is used to warm the house, warm the water, and in many instances to cook. Therefore, gas costs per household can vary depending on usage, location, and other factors. The average natural gas bill in the US is $63.34. In some states such as Alaska, Hawaii, or Maine gas may be more expensive. Alternatively in other states such as New Mexico, Idaho, and Nevada, gas may be significantly cheaper than other areas. If you are trying to cut back on natural gas usage you should study your bill. While monthly utility bills can be confusing, there should be a section dedicated to usage. You can visit this section to monitor monthly usage and see if new actions save the amount of resources you are using7.

What are gas procurement charges?

Gas companies need to source and transport the fuel required to power operations. The utility companies acquisition and transport fees may be labeled as procurement charges. Procurement charges can vary on a month-to-month basis. In most cases, they change on the first business day of each month. Gas bills can include more charges than just simple usage. Most gas bills are composed of a variety of components such as procurement costs, transportation costs, surcharges, and so forth8. Wholesale gas markets impact procurement costs the most9.

How many therms does the average household use?

In summer months, households typically use less therms than in winter months. In California, residents use an average of 40 therms per month in the winter and 16 therms per month in the summer10. In Georgia, the average annual natural gas consumption per household is about 717 therms11. Heating is a major portion of natural gas consumption. In areas with colder climates, you will likely see more natural gas usage. In addition to location, the size of your home can also significantly impact the amount of therm you use. Some opinions say that averages may not be as accurate as we hope since some households may not use natural gas.

Who has the cheapest natural gas?

And the winner is. . . Utah! Coming in at $9.12 per 1,000 cubic feet, Utah has some of the cheapest natural gas prices12. The runner up is Montana but Utah is still about 8% cheaper. Other states with some of the cheapest natural gas rates are Idaho, New Mexico, Minnesota, New Jersey, Colorado, Wisconsin, Nevada, and Oregon.

How is natural gas billed?

Most gas bills share similarities but the charges may vary. Most gas bills will reflect usage. In addition, you may notice other charges such as procurement and surcharges. Some households may have very low gas bills, leading them to believe they are efficient. However, when you dive into your gas bill you may discover even more ways to save.

How is natural gas price calculated?

In most cases, natural gas prices are based on supply and demand. However as we mentioned, location and other factors can change how natural gas prices are calculated. Your utility bill probably expresses your gas usage as therms. However, appliances or furnaces may express required usage in other measurements such as BTU. If you are trying to calculate how much your furnace or appliances cost each month you may need to do some conversions13. These tips should help you calculate natural gas costs. . .

One therm = 100,000 BTU
One therm = 100 cubic feet of gas
One thousand cubic feet (MCF) = 1,028,000 BTUs
One cubic foot natural gas = 1,028 BTUs

Conclusion

As technology continues to advance, experts predict that gas prices will continue to remain inexpensive. There’s a possibility they may even drop. Natural gas that we dig out of earth today was formed approximately 100 million years ago. Most companies add mercaptan to natural gas to give it a distinct and unpleasant smell. This helps individuals detect natural gas leaks. In its natural state, natural gas is odorless. Some individuals may prefer an electric furnace and electric appliances over gas. While it’s true that electric appliances and furnaces may be safer than gas, electricity can cost more. However, with an increasing amount of alternative clean energy sources, things may be changing. If you prefer an eclectic household but can’t afford even higher utility bills, you should consider using a clean energy source. Households can access clean energy without installing expensive solar panels or wind power sources on their home or property. Inspire provides customers with clean energy without a hefty upfront investment. Inspire’s customers energy usage is fully offset by renewable energy credits sourced from wind and solar power. With Inspire, you can take advantage of a personalized subscription, advanced technology such as intelligent climate control, and one flat monthly energy bill. That’s right, no more sky high summer electricity bills. Whether you have a gas or electric household, Inspire can save you money while saving the environment.

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Learn More About Natural Gas:

Sources:


  1. blog.constellation.com/2020/05/28/natural-gas-cost-per-therm 

  2. eia.gov/tools/faqs/faq.php?id=45&t=8 

  3. blog.constellation.com/2020/05/28/natural-gas-cost-per-therm 

  4. markets.businessinsider.com/commodities/natural-gas-price 

  5. eia.gov/todayinenergy/detail.php?id=46376 

  6. naturalgassolution.org/natural-gas-affordable 

  7. move.org/utility-bills-101 

  8. pge.com/en_US/small-medium-business/your-account/your-bill/understand-your-bill/glossary/glossary.page 

  9. cpuc.ca.gov/cpucblog.aspx?id=6442452592&blogid=1551 

  10. cpuc.ca.gov/uploadedFiles/CPUCPublicWebsite/Content/AboutUs/Organization/Divisions/PolicyandPlanning/PPDWork/PPDWorkProducts(2014forward)/California%20Regions%20Final.pdf 

  11. georgiagassavings.com/blog/how-many-therms-does-a-typical-household-use 

  12. chooseenergy.com/news/article/cheapest-natural-gas-rates 

  13. directenergy.com/learning-center/how-to-calculate-gas-bill