Commercial Natural Gas Prices FAQ

Read the Residential Natural Gas Prices FAQ

What’s been happening with natural gas prices?

Natural gas has had extreme price swings often following the domestic and global oil markets. Natural gas is traded as a commodity on the New York Mercantile Exchange (NYMEX).

  • The decade since 2000 has seen natural gas prices become significantly more volatile, more so during the hurricane season of 2005-2006.
  • During the summer of 2007, natural gas prices averaged about $7 per dekatherm.
  • By June 2008, natural gas futures jumped about 80% and hovered at or above $13.
  • In late July 2008, prices began to decline, largely due to the fuel market's response to a global recession.
  • At the end of September 2008, prices were in the $7 to $8 range.
  • By the end of February 2009, prices were near $4 per dekatherm, off 70% from their 2008 peak.
  • Throughout the 2009-2010 heating season, prices continued to be well below their 2008 record levels.
  • As we move through the 2011-2012 season, price fluctuations continue to be moderate as they have been since 2010. At the end of January 2012, NYMEX prices for natural gas have fallen to lows not seen since 2002.

Why can natural gas prices be so volatile?

Natural gas is a worldwide commodity. The market’s volatility is due to:

  • Tight supplies caused by natural disasters or other unexpected events.
  • Global tensions.
  • High cost of competing fuels such as oil and propane.
  • Decreasing natural gas supplies from Canada.
  • Weather, such as extreme cold weather or hurricanes that may damage gas drilling or refining facilities.
  • Increasing use of natural gas to replace coal in manufacturing electricity.
  • Increasing international demand for natural gas.
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What prices can we expect for the upcoming heating season?

No one can predict where natural gas prices may head due to the volatility. Natural gas prices can be quickly affected by hurricanes, cold weather, global tensions and the oil market.

What is MGE doing to reduce gas price volatility?

MGE works to control natural gas prices to minimize price swings for our customers. We:

  • Begin to buy gas supplies in the summer and put this gas into storage to ensure adequate supplies for winter and hedge against possible higher winter prices
  • Employ a financial risk management program to reduce price swings that could be caused by volatile gas prices

How do natural gas prices compare to other fuels for commercial and industrial customers?

Average local prices per therm
as of Feb. 1, 2012
Fuel oil (large volume): $2.19
LP gas (large volume): $1.25
Natural gas (MGE small commercial customer, firm supply): $0.66
Natural gas (MGE large commercial customer, interruptible): $0.50

How can MGE help customers manage costs?

We encourage you to begin preparing for the colder months ahead. Conserving energy and planning your energy budget can help:

  • Visit MGE Business Services for:
    • Energy-saving tips
    • Information about our specialized services to increase energy efficiency in your business
    • Information how to track your business energy use online
  • Call the Business Help Line at 252-7007 to get answers to specific questions
  • If you get behind on your energy bills, contact MGE at 252-7007 as soon as possible to set up a payment plan
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For more information for industry sources:

The Energy Information Administration (U.S. Department of Energy)
The Natural Gas Supply Association
American Gas Association