Beating the High Cost of Natural Gas

Michael Giberson

Raymond Welch is perhaps the only person in Maryland who doesn’t care about the record-breaking heating costs expected to hit homeowners this winter.

When Welch hears about soaring energy prices, he smiles and gazes out the window of his farmhouse at his personal natural gas well, which supplies his home with unlimited free heat, hot water and cooking fuel.

Don’t you wish you had a physical hedge to get you through the winter? Not only do they have the energy costs covered, they also don’t have to pay distribution charges. See the full story in the Baltimore Sun.

3 thoughts on “Beating the High Cost of Natural Gas

  1. Is the natural gas utility in whose service territory he resides charging him a standby fee? NO, because unlike electricity, early on in natural gas pipeline deregulation, FERC established bypass precedent that gives the incumbent utility no opportunity to block self-provision.

    Sorry, pet peeve …

  2. Uh, someone should tell him his natural gas is not free. Assuming he could sell his natural gas on the market place at prevailing prices, then the opportunity cost of using his own gas has increased just as much as ours has.

    Not understanding opportunity cost is my pet peeve.

  3. He can use his own gas without paying for transmission and distribution, including the associated returns on ratebase to the transmission and distribution entities.

    If he sells his gas into the market, his price is a function of the quantity he can provide, the pressure at which it can be provided, his location relative to transmission and/or distribution, etc.

    His profit on the sale of his gas into the market is a taxable transaction; his purchase of the quantity of gas he requires for his own use is an after tax transaction.

    Unless he is in the position to produce far more gas than he requires to meet his own needs, it would seem that the greatest opportunity cost is the opportunity lost by his attorney and tax accountant.

Comments are closed.