Natural gas customers in the Kokomo area had a break with bills this winter, but another type of gas — fuel for vehicles — guzzled that extra money.
A mild winter and lower supply costs reduced natural gas bills an average of $112, or 24.9 percent, November through February for Northern Indiana Public Service Co. customers.
But the savings on heating costs only lessened burdens on household budgets as higher gasoline prices over the same four months drained more money than most people saved on heating, according to a Ball State University economist.
Meter prices
NIPSCO’s customers paid an average monthly bill of about $84 over November, December, January and February. The monthly average for the same four months in 2010 and 2011 was about $112, or $28 more.
Kokomo customers last winter would have belonged to Kokomo Gas & Fuel, then a sister company of NIPSCO, but both gas providers had similar bill sizes, said company spokesman Nick Meyer.
Warmer weather this winter led to NIPSCO customers’ using 18.2 percent less gas last winter.
The Indiana State Climate Office recorded an average air temperature for Howard County of about 35 degrees F from November through February. A year earlier, the average temperature was almost 10 degrees cooler.
Also, the natural gas NIPSCO bought cost about 13.1 percent less as commodity prices continued a slide since their peak in 2005.
“It’s unprecedented that they’ve been this low,” Meyer said, “and it’s difficult to project if it’s truly reached the bottom. However, we don’t expect them to maintain these low levels for the long term. At some point, they’ll start to trickle back up.”
He attributed NIPSCO’s lower supply costs to more natural gas on the U.S. market, notably from, some times controversial, shale gas.
Bruce Jaffee, a professor of business economics and public policy at Indiana University, said increased natural gas supplies should keep winter heating costs down for several more years as long as the weather does not become too extreme.
“Of course, what can get prices to shoot up is a huge amount of disruption in energy in the Middle East,” Jaffee said. “But this is a lot more psychological than anything else. In fact, we have really good natural gas supplies in the U.S. and great natural gas supplies in Canada. I think we’re in a sweet spot for maybe the next five years.”
Pump prices
A $28 savings each month meant little in terms of overall household energy costs, according to Michael Hicks, director of the Center for Business and Economic Research at Ball State.
Gasoline prices increased enough this winter, compared to last, to negate savings on most homes’ heating bills.
“In terms of overall energy expenditures, I think most people are going to be worse off,” Hicks said.
According to the U.S. Bureau of Labor Statistics’ most recent estimates, the average American household spent $178 fueling its vehicles each month in 2010.
Gas prices through 2011 increased an average of 74 cents, or more than 26 percent. That would mean households were spending about $47 more each month on gasoline.
And while Kokomo residents used less natural gas, Hicks expected most people have continued to drive the same amount as they did in 2010.
“[Vehicle] gas consumption is going to be fairly inelastic,” he said. “It’s not going to drop nearly as much due to a price change as, say, with flowers.”
• Daniel Human is the Kokomo Tribune business reporter. He can be reached at 765-454-8570 or at daniel.human@kokomotribune.com.
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