What’s Fueling California’s High Natural Gas Prices

Perhaps you’ve noticed that your gas bills have been unusually high this winter.

The average residential gas bill in January for San Diego Gas & Electric customers was $225, a big jump from $104 last January, according to a presentation at a hearing last week by Jean Spencer, a supervisor with the California Public Utilities Commission’s energy division.

Pacific Gas and Electric customers’ average January bills were up 30 percent from last year, and Southern California Gas Company bills were up 240 percent.

In many places, customers are struggling to cover the skyrocketing costs.

“It’s a very real question for them: Should they heat or should they eat?” said Edward Lopez, the executive director of Utility Consumers’ Action Network, a utility watchdog in San Diego.

Last week, Gov. Gavin Newsom called on the Federal Energy Regulatory Commission to investigate whether “market manipulation, anticompetitive behavior or other anomalous activities” had contributed to the state’s higher prices. In late December, wholesale gas prices in California were more than seven times higher than prices for gas delivered into Henry Hub, a nexus of pipelines in Louisiana considered an industry benchmark.

Those costs are passed on to consumers, and two-thirds of California households rely on natural gas for home heating. The California Public Utilities Commission voted last week to accelerate a state program to help families with high gas bills, so Californians should see a credit for up to $120 on their March bill.

“Customers are really hurting here,” Alice Busching Reynolds, the commission’s president, said at a hearing investigating the high prices. “People have experienced severe sticker shock on their energy bills.”

California imports 90 percent of its gas from other states and Canada, so it’s reliant on pipelines. But many of those pipelines were closed for unplanned maintenance in November and December, limiting supply flowing to California and other Western states, said Aleecia Gutierrez, director of the California Energy Commission’s Energy Assessments Division. A pipeline explosion in 2021 had already reduced capacity to move gas from Texas and neighboring states, where much of California’s supply comes from.

Additionally, the past few months in California have been especially cold, creating an unusually high demand for heating. That came after a historically hot summer strained the state’s electricity grid, which is largely powered by natural gas, said Sung Won Sohn, an economics professor at Loyola Marymount University.

“This is not what I’d call normal,” he told me. “We’re just getting some bad luck.”

California also has less natural gas storage than it once had, in part because Aliso Canyon in Los Angeles, one of the biggest natural gas storage sites in the Western United States, reduced its capacity after a major leak there in 2015. That means the state has fewer reserves when demands are high.

Taken alone, each of these issues may not have been enough to lead to such a big spike in gas prices, said Severin Borenstein, an energy economist at the University of California, Berkeley. But, “it has been a near-perfect storm of factors to boost the price of natural gas,” he said.

More on California

Still, that doesn’t mean that the spike is entirely caused by scarcity. Sellers could be strategically reducing the supply of natural gas to California to further raise prices, he said. The investigation Newsom is calling for may yield answers about any price manipulation.

It wouldn’t be the first time. In 2000 and 2001, El Paso Corp., a pipeline operator based in Houston, withheld natural gas supplies from California by running its pipeline at less than full capacity and doing unnecessary maintenance, sending prices to record levels during an energy crisis, according to a federal judge’s ruling. The company had to pay a $1.7 billion settlement.

“We get into a very tight market for legitimate reasons, but then the question is, ‘Is someone making it even tighter?’” Borenstein said.

The good news is that natural gas prices have begun to drop. The price of natural gas being delivered to California peaked on Dec. 22, and has been trending downward ever since. That reduction in cost should be reflected in consumers’ bills starting this month.

If you read one story, make it this

Before a mass shooting, this ballroom in Monterey Park was their glittering “dancing star.”

The rest of the news

Delta water: Gov. Gavin Newsom suspended environmental regulations around how much water flows into the San Francisco Bay in order to allow state officials to hold more water in reservoirs, CalMatters reports.

Bragman: Howard Bragman, a publicist who often helped the famous navigate embarrassing or volatile spotlight moments, and who also had a specialty of advising clients who were coming out of the closet, died on Saturday in Los Angeles. He was 66.


Laguna Beach: The Laguna Beach City Council is looking at banning the use of all balloons on public property, as well as their sale and distribution, The Orange County Register reports.

Housing crisis: Culver City voted to ban camping in public places, a move that is meant to address the homelessness crisis, but that opponents say punishes people for being poor, The Los Angeles Times reports.

Julian Wasser: The artful photojournalist who created some of the most indelible images of 1960s Los Angeles died this month. He was 89.


Campaign money: Two candidates for the Fresno County board of supervisors say they plan to disregard rules banning them from transferring campaign funds because they claim it protects incumbents, The Fresno Bee reports.


Woman attacked: A woman was hospitalized Sunday afternoon after an unprovoked attack in San Francisco near Dolores Park, The San Francisco Chronicle reports.

Immigration: Undocumented people convicted of selling fentanyl in San Francisco will be easier to deport under a new law, The San Francisco Chronicle reports.

What we’re eating

Flourless chocolate cake.

Where we’re traveling

Today’s tip comes from Matilda Jane:

“I moved from Atlanta to San Francisco last April and immediately noticed the giant Bernal Heights Hill looming from outside our window. I’ve gone up to see an amazing view of the city on clear days and gorgeous scenes of the fog rolling in. It’s become my favorite place to go for walks, running among the dogs also out for a walk and be reminded of how beautiful my new state is.”

Tell us about your favorite places to visit in California. Email your suggestions to [email protected] We’ll be sharing more in upcoming editions of the newsletter.

And before you go, some good news

For a few weeks each year, a small waterfall in Yosemite National Park glows orange at sunset, making it appear as though molten lava is rushing down the side of a cliff.

The unique lighting effect, which draws thousands to the park each year, happens only on evenings with a clear sky, when the waterfall is flowing, and when the sun is at the right angle in mid to late February.

Because of the heavy rains over the past few months, this year’s spectacle, known as “Firefall,” is expected to be a great one, CNN reports.

Thanks for reading. I’ll be back tomorrow. — Soumya

P.S. Here’s today’s Mini Crossword.

Briana Scalia and Isabella Grullon Paz contributed to California Today. You can reach the team at [email protected].

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