Here’s why your gas bills are so much higher right now (2023)

THE PAIN IS REAL.

None of us lives in Hearst Castle. Yet my natural gas bill shot from $44 to nearly $300 in the span of two months. Kay Kearney’s is projected to hit $368 in January — more than three times what she paid this time last year. And Burl Estes is staring down a $397 tab for having the audacity to keep warm.

“It’s not sustainable,” said Kearney, whose home in Garden Grove is a modest 1,500 square feet. “We keep the thermostat at 68, when raining and cold. Turn off the heater when it’s nicer. With the current economic issues and inflation what are we to do? There is nowhere left to cut back.”

We’ll talk about the powerful supply-and-demand forces at work here in a moment, but first, the nitty gritty, at least according to some experts:Politics, with perhaps a dash of greed.

With good intentions and pure heart, more or less, California hurtles headlong toward 100% renewable energy. We snub fossil fuel power plants and natural gas storage facilities in our quest to quell global warming. But we don’t yet have enough reliable — and affordable — energy to replace them.

“It’s like taking a ship into harbor but, before getting to the dock, saying, ‘Everyone off now!’” said Shon R. Hiatt, associate professor at USC Marshall School of Business, who specializes in global energy.

“What happens is, everyone falls in the water.”

And so here we are. Soaked.

(Video) How Much Energy Bills WILL Cost This Winter!

Here’s why your gas bills are so much higher right now (1)String up the scoundrels!

Have you noticed that, when the price of essentials like gasoline and natural gas skyrocket, some of your most hard-core “let the market decide” neighbors become quasi-socialists, demanding that the government do something to control costs and/or punish the scoundrels picking our pockets?

Here’s an uncomfortable fact check: What we’re seeing in these crazy bills is pure, unadulterated capitalism — “an economic and political system in which a country’s trade and industry are controlled by private owners for profit.” Profit. Rest assured that folks are making money off our misery.

Don’t blame us!says SoCalGas, the largest gas distribution utility in the nation, serving 21.8 million consumers across 24,000 square miles of Southern and Central California.

“SoCalGas doesn’t set the price for natural gas,” the company explains (though it’s complicated — more on this in a minute). “Instead, natural gas prices are determined by national and regional markets. SoCalGas buys natural gas in those markets on behalf of residential and small business customers, and the cost of buying that gas is billed to those customers with no markup, meaning SoCalGas does not profit from gas commodity prices going up.”

The high bills, it said, are the product of historically high natural gas prices in the western United States.

How high? Around this time of year, natural gas prices in California are usually $5 to $6 a dekatherm.

Folks carped a lot last year, when prices rose to some $8 a dekatherm. But at the end of December, prices soared as high as $50 a dekatherm and averaged about $42 a dekatherm, more than 5 times last year’s high price, according to data from the U.S. Energy Information Administration.

“Due to our available natural gas storage, and other factors SoCalGas uses to help mitigate price fluctuations, the final price estimate SoCalGas filed with the CPUC for January ended up being $34/dekatherm, an unprecedented January price for our customers,” the company said.

Translated, that’s means if your highest bill last winter was around $65, it’ll be more like $160 this year. And if it was $130 last year, it’ll be more like $315 this year.

(Video) Gas bills could be much higher this winter. Here’s why.

Before we go into why some folks think this is bunk, let’s say ouch, and why?

Here’s why your gas bills are so much higher right now (2)

Supply and demand?

You’ve heard a lot about “perfect storms” and dark tales of market manipulation. But the official explanation, according to the U.S. Energy Information Administration, is a simple tale of supply and demand.

Demand: From the Canadian border to the Mexican border, the West Coast has been shivering thanks to widespread, below-normal temperatures that force us all to sleep with socks on. This increases demand for natural gas — which is, by far, the greatest source of our energy supply for all but eight hours of the day, when the sun is shining and solar power is plentiful, according to the California Independent System Operator (which runs our electric grid).

Supply: Unfortunately, supply has dropped precisely as demand has shot up. Folks up north aren’t shipping natural gas down our way because they’re cold, too. An interstate pipeline in Texas that feeds the West Coast has been down for maintenance. And we’re just not banking as much natural gas as we might; storage levels on the West Coast are low, as one can see in the tale of the troubled Aliso Canyon natural gas storage facility, which is allowed to operate at 60% of capacity and is on the chopping block.

Result: Crazy high prices.

Who’s reaping these profits? We’re looking at you, fossil fuel titans Exxon Mobil, Shell, Chevron, TotalEnergies and BP. But Sempra Energy, of which SoCalGas and San Diego Gas & Electric are regulated subsidiaries, is a player, too.

“As we buy natural gas … at retail, the utility’s parent company (Sempra) is helping to ship huge quantities of natural gas out the back door at wholesale,” said an op-ed by Craig Rose, who sits on the steering committee of Public Power San Diego. “That’s a market factor.”

Sempra has joined ventures investing billions in facilities and pipelines to export natural gas, Rose writes. We asked Sempra to chat a bit about this; the company didn’t get back to us by deadline.

Investigate!

Calls for action and investigations are hitting a crescendo.

(Video) Here's why your natural gas bills are about to skyrocket

“Customers already struggling to pay their utility bills so that they can keep their heaters and stoves running during the winter will face increased hardship if their bills potentially double in the month of February,” said the Public Advocate’s office — the consumer arm of the California Public Utilities Commission — in an emergency filing.

“(A)mong the areas of highest concern for natural gas affordability, most are located in Southern California. Given the ongoing increases in both electric and gas utility bills, customers cannot afford to see such steep spikes in their bills.”

The Public Advocate urges the PUC to OK automatic enrollment in COVID-19-type relief payment plans, to spread the price spikes over a period of months to ease the shock and to distribute consumer credits that usually hit in the spring a couple of months early.

“The Commission also should investigate the cause(s) of the natural gas market price spikes,” the filing said.

Katy Morsony, staff attorney with The Utility Reform Network, which keeps a critical eye on the PUC, agrees.

“No one should have to choose between making dinner and heating the house,” she said. “We’re calling on the CPUC and the utilities to use all the tools they have to help maximize the ability of customers to pay their bills. And we certainly would call on the CPUC to investigate exactly what is driving these spikes and how we can prevent them.”

The group Consumer Watchdog isn’t buying the explanations we’re being fed.

“I am calling on you to launch an investigation into Southern California Gas’s role in the recent dramatic increases in the costs of natural gas and its parent company SEMPRA’s role in the cost increases,” the group wrote to the state Attorney General.

“The doubling of natural gas prices is unique to California. While the utility has made natural gas available to its customers as it is required to do, it has purchased gas at unreasonably high prices, with higher profits for SoCalGas’s parent company SEMPRA, that sells natural gas to So Cal Gas through its other subsidiaries. Most importantly, Southern Gashas deceived its customers about the fact that it is profiting from the increase in natural gas costs.

(Video) Is your heating bill higher than normal? Here's why, and how to bring it back down:

“So Cal Gas widely stated that ‘SoCalGas and SDG&E do not profit from gas commodity prices going up.’ In fact, SEMPRA, the parent company of both utilities, and its other subsidiaries, profits greatly from the increase in natural gas prices ….”

The CPUC, California’s utility regulator, is very concerned, said spokeswoman Terrie Prosper.

“(W)hile the CPUC does not regulate gas prices or gas producers, given the impact of these high prices on ratepayers, we will … soon hold an en banc (hearing) to bring in market experts to highlight publicly what we are seeing with gas prices and electric prices, examining all the possible drivers behind the gas price spikes and exploring potential actions that can be taken.”

What now?

There’s some help available to consumers through the Gas Assistance Fund and payment plans that can be arranged directly with the utility.

SoCalGas also offers tips for cutting your bill, including lowering the thermostat three to five degrees, which can save up to 10%, installing proper caulking and weather-stripping, which can save up to 15%; washing clothes in cold water, which can save up to 10%; as well as lowering the temperature on your water heater and not using gas-fueled spas and fireplaces.

Take heart that natural gas prices are dropping: It’s been trading at about $17 to $20 a dekatherm as of late, far higher than usual but far lower than January’s peaks.

Even if prices drop dramatically, the underlying issues of switching from fossil fuel to green energy remain. California’s insistence on doing that quickly means no investment in new pipelines and new storage, which means we’re forced to rely on the expensive spot market.

“The goals are just too far-fetched and unrealistic — unless you want to inflict major economic pain,” said Hiatt of USC. “The problem is, so much political capital has been built into this that no one wants to admit they did something wrong. Just push forward until something breaks.”

A more sober, and less painfully expensive approach: Plan for a longer transition period, he said.

(Video) As price of natural gas surges, so do household energy bills

  • Report an error
  • Policies and Standards
  • Contact Us

Here’s why your gas bills are so much higher right now (3)

FAQs

What is the real reason gas prices are so high? ›

He added there are four main contributors to the price of gas, including taxes, distribution and marketing, and refining, but about two-thirds of what you pay comes down to the price of crude oil, which is up 70 percent from last year.

Why is my SoCalGas bill so high 2022? ›

The increases result from the soaring wholesale price of natural gas paid by SoCalGas and passed through to its customers. That price, set by national and regional markets, rose 2 1/2 times over December's price, and is up more than 300% from January 2022, according to SoCalGas.

Why has my gas consumption doubled? ›

Increase in Appliance Usage

Increased use of appliances can impact your bill. For example, water heaters work longer and harder during colder weather and could increase your natural gas usage. Having guests at home, cooking more, and leaving appliances on could also impact your bill.

What uses the most gas in a home? ›

Just as you may have suspected, space heating and water heating — followed by electricity generation — use the most residential gas.

Does the president control gas prices? ›

Truth be told, U.S. presidents have very little control over the price per gallon. (Editor's note: This blog was originally published on February 3, 2021, and updated on November 1, 2022, to reflect changes in the retail fueling market, including record gasoline prices.)

Who controls gas prices in the US? ›

Petroleum prices are determined by market forces of supply and demand, not individual companies, and the price of crude oil is the primary determinant of the price we pay at the pump.

Did Socalgas raise their rates? ›

Rate Change

New gas transportation rates, approved by the CPUC, went into effect on January 1, 2023. Residential average transportation rates increased by about 8% and small business transportation rate increased by about 5% on average.

How much is gas bill going up? ›

Ofgem have announced that from 1 October, most people will pay about £1,570 more per year for gas and electricity. This increase is because the energy price cap, set by energy regulator Ofgem , is set to jump by 80 per cent to reflect rising wholesale energy costs for energy suppliers.

Does hot water use gas? ›

Some only need electricity to do their job, while others will combine electrical input — to operate such things as the ignition — along with gas to heat the hot water. If your tankless unit has a pilot light or an exhaust pipe at the top, then you'll know it is using gas to heat the water.

Does air conditioning use gas? ›

Yes — like many of your car's features, the air conditioning system uses gas.

How much gas does a 2 person house use? ›

Your typical 2-bed house uses around 10,000 kWh of gas per year.

What increases gas usage? ›

Appliances like the water heater, dryer, and gas range make up a large percentage of our natural gas usage. Like turning off the lights when leaving a room, small adjustments to daily activities like bathing, laundry, and food preparation can lower your gas bill.

Will gas prices go down in 2023? ›

The yearly national average price of gas in 2023 is forecast to drop nearly 50 cents per gallon from that of 2022 to $3.49, according to GasBuddy's 2023 Fuel Outlook released this past Friday.

Who is making all the money from high gas prices? ›

In addition to oil company executives, shareholders also reaped the benefits of high energy prices during the quarter. Since the start of 2022, Exxon and Chevron shares have risen close to 46% and 26%, respectively.

Why are gas prices so high 2022? ›

Oil companies earn more per gallon in the West Coast region

So far in 2022, large oil producers have reported greater fuel refining profits on the West Coast than in the rest of the country.

Who controls most of the gas in the world? ›

Natural gas accounts for 32% of primary energy consumption in the United States, the world's largest producer. Russia is the second biggest producer, and also has at least 37 trillion cubic meters of natural gas reserves, the most in the world.

How much would gas be if oil is $200 a barrel? ›

Analysts cited by NPR project that if oil hits $200, the retail price of gas would average $5.84 in the US.

Does the US government determine gas prices? ›

From a peak of $5.02 per gallon of regular, the national average is now down to $3.27. Drivers suffering from price whiplash might be asking "Who controls gas prices?" The short answer is... No single person, company or government can really be said to set gas prices.

Why is gas $6 a gallon in California? ›

Multiple markets. The main reason for the price disparity is that there are essentially seven major wholesale gasoline markets in the United States: two in California, another for the Pacific Northwest, and the remaining four spread across the rest of the country.

Why is my gas bill so high California? ›

“The high bills are a result of historically high natural gas prices, specifically in the western United States,” SoCalGas spokesperson Chris Gilbride said in an email. SoCalGas customers are paying sharply higher bills for January usage because wholesale natural gas prices have soared.

How much does the average person spend on gas a month 2022? ›

Average transportation cost per month: $819

In addition, we spend an average of $1,575 per year on car insurance. Gasoline accounts for 16% of transportation costs — the average amount spent on gas per month is $131.

What has been the highest gas price in California? ›

Gas in Los Angeles County hits record high of $6.467 a gallon.

Will natural gas prices go up in 2023? ›

Anticipating growing US natural gas production that will top prior highs, the US Energy Information Administration scaled back its near-term natural gas price forecasts, expecting Henry Hub spot prices will average $4.90/MMBtu in 2023, down from $6.42/MMBtu in 2022.

What month are gas prices highest? ›

From refinery maintenance to consumer demand, seasonal fuel production affects gas prices at the pump. Traditionally, gas prices are at their lowest during the first week of February and then begin to climb, often peaking right before Memorial Day.

What is the cheapest day to fill up gas? ›

“Following Monday, Sunday is the cheapest day to fill up. But even if you can't always time your fill ups, the golden rule is to always shop around before filling up.”

Is it cheaper to use gas or electricity? ›

electric heating cost is much cheaper. A single kilowatt-hour (kWh) unit of gas costs around 4.65p, whereas the average price for a kWh of electricity is more than 20p.

Does shower use gas? ›

For typical pump-assisted showers, the hot water that comes out of the shower head will have been heated up by a conventional gas-powered boiler and then stored in a hot water tank/cylinder ready to be used as necessary. The pump makes sure the water flows smoothly, rather than in fits and spurts.

Is it cheaper to boil water with gas or electric? ›

Which is more energy efficient - boiling water using an electric kettle, a kettle on a gas hob or a microwave oven? IT TAKES the same amount of energy to heat one litre of water no matter which method of heating used. The only difference in the methods is the amount of time each takes.

Is it cheaper to heat water by gas or electric? ›

Gas water heaters cost less to operate than electric water heaters—about 33% less.

Can a house have hot water without gas? ›

Homes without a gas line or propane tank can also enjoy the advantages of on-demand hot water by installing tankless units powered by electricity. These units, which heat water with thick copper rods, are quieter and about a third smaller than gas or propane tankless heaters.

Why are gas prices so high 2022 us? ›

Why were gas prices so high in 2022? Gasoline and oil prices began to rise in 2022 after Russia invaded Ukraine in February. Prices were driven up by U.S. and European Union sanctions hampering Russia's ability to sell crude oil.

Why are energy prices so high 2022? ›

Why is the cost of energy going up? Wholesale prices (the price which your energy supplier pays for gas and electricity) have risen due to an increase in global demand as major economies have climbed out of the pandemic-induced 'recession', all at the same time.

What was the highest gas price prior to 2022? ›

Prior to 2022, the highest ever average recorded by AAA was $4.114 per gallon in July 2008. Average U.S. gas prices soared to a record high of $4.33 in March shortly after Russia invaded Ukraine, which caused crude oil prices to surge and threatened global supply.

How much do you spend on gas a month 2022? ›

Gasoline accounts for 16% of transportation costs; the average monthly gas expenditure is between $150 and $200. Read to know more about the average gas spend per month.

Will gas prices go down 2023? ›

The yearly national average price of gas in 2023 is forecast to drop nearly 50 cents per gallon from that of 2022 to $3.49, according to GasBuddy's 2023 Fuel Outlook released this past Friday.

Will gas prices go down in 2024? ›

In the first quarter of 2024, we expect natural gas prices to increase, then drop below 2023 prices.

What is the highest gas price ever? ›

American drivers had it rough back in 1981. The average price of gasoline spiked to $1.353 a gallon that year — up from $1.221 in 1980 and more than double the price just three years earlier.

Videos

1. Cost of living crisis: Why are energy bills going up so much?
(Sky News)
2. Why Your Electric Bill Is So High — and Could Keep Climbing | WSJ
(Wall Street Journal)
3. Martin Lewis Gives Practical Advice On Mortgages, Energy & Gas Bills | Good Morning Britain
(Good Morning Britain)
4. Why your PG&E gas bill is higher than you thought
(ABC10)
5. Nationwide natural gas price surge could show up on your gas bill | FOX 9 KMSP
(FOX 9 Minneapolis-St. Paul)
6. Martin Lewis: Energy Bills Expected To Fall | Good Morning Britain
(Good Morning Britain)
Top Articles
Latest Posts
Article information

Author: Wyatt Volkman LLD

Last Updated: 01/14/2023

Views: 6820

Rating: 4.6 / 5 (66 voted)

Reviews: 81% of readers found this page helpful

Author information

Name: Wyatt Volkman LLD

Birthday: 1992-02-16

Address: Suite 851 78549 Lubowitz Well, Wardside, TX 98080-8615

Phone: +67618977178100

Job: Manufacturing Director

Hobby: Running, Mountaineering, Inline skating, Writing, Baton twirling, Computer programming, Stone skipping

Introduction: My name is Wyatt Volkman LLD, I am a handsome, rich, comfortable, lively, zealous, graceful, gifted person who loves writing and wants to share my knowledge and understanding with you.