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With an economic downturn facing the country the last couple of months, Missourians have been looking for answers to save on energy. They just got some good news.
Empire Gas, which supplies heating oil, has announced they have filed for a Purchased Gas Adjustment with the Missouri Public Service Commission.
According to a statement released by Empire, the adjustment would lower the purchase price of gas by about 10.5 percent from the current PGA that was set on June 6.
According to the release, PGA accounts for about two-thirds to about three-fourths of the total price that consumers see. The release says that a typical customer that uses about 600 cubic feet of gas will save about $69 between now and March.
Empire has requested the new rates go into effect next Wednesday.
Empire Vice President Ron Gatz in a statement said, “We are pleased to be able to pass these lower prices to our customers. However, the price of natural gas remains volatile and the potential for price spikes due to extreme weather conditions and production disruptions still exist.”
Gatz went on to say customers should try to conserve energy.
William Jewell College Economic Professor Gregg Whittaker said consumers have seen lower prices at the pump and with other energy sources because global demand had lowered due to talks about recession, not only in the United States but worldwide.
“A big driver of the increase in prices we’ve seen over the summer and the last couple of years is global demand for energy in particular countries like India and China,” Whittaker said. “Their economies have turned around and it’s been a huge change in the structure of the energy market.”
He said lower global demand is forcing speculators to sell off contracts based on the future prices of oil.
“These oil prices have really been built on speculation about what is going to happen in the future,” he said. “Now the expectation is the economic situation is going to be weaker than expected and as a result demand is going to be significantly lower than expected.”
Whittaker said a lot of talk about speculators driving up the prices is true, but is not the main reason.
“If people think energy prices are going to go up, they’re going to be buying those futures contracts and the more people buy, the more the prices go up,” he said. “I really think it’s the actual participants in the market and the consumers. I don’t attribute a lot of it to speculation. I don’t think it’s a bunch of guys at the Chicago Board of Trade that are responsible for this or a few CEOs of oil companies.”
In other words, Whittaker attributes the decline in recent months to less consumer demand, not only in the U.S. but also other markets. But Whittaker thinks the U.S. economy will rebound sometime in the next 12 to 18 months. When that happens, he said prices would start to go up again. Whittaker thinks the days of cheap gas are over.
“I don’t think we’re going to return to the pre-Katrina days of $1 a gallon gas,” he said. “Those days are never going to come again. China and India are not going to go away.”
He said once third-world countries continue to develop, the demand will increase further.
Whittaker thinks consumers should take advantage of this winter season.
“As soon as (the economy) turns around, prices will start marching up again,” he said. “We will have a good winter from the consumer’s perspective.”