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NATURAL GAS EXPLAINED

NATURAL GAS PRICES

BASICS

The price that consumers pay for natural gas has two main components, which include various taxes and fees:

• Commodity cost—The cost of the natural gas itself, either as produced natural gas or as natural gas purchased at a
market trading hub or under a contract by marketers and utilities.
• Transmission and distribution costs—The costs to move the natural gas by pipeline from where it is produced or stored
to local natural gas distribution utilities and the cost to deliver it to consumers.

The shares of these two cost components vary according to natural gas market conditions.

Average natural gas prices in the United States

Retail prices for natural gas can vary greatly between states and cities. The differences are a result of six major factors:

• Distance from where natural gas is produced or stored

• Availability and capacity of transmission pipelines to move natural gas from producing areas, storage facilities, and
trading hubs to distribution hubs
• Volumes and characteristics (such as timing and volatility) of consumer demand
• Costs of distribution, taxes, and other charges
• State regulations
• Availability of competing suppliers

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Natural gas prices - U.S. Energy Information Administrati... https://www.eia.gov/energyexplained/natural-gas/prices.php

U.S. average annual natural gas wellhead, city gate, and residential prices,
1995-2020
dollars per thousand cubic feet
16

14

12

10

0
1995 2000 2005 2010 2015 2020

wellhead city gate residential

Data source: U.S. Energy Information Administration, Natural Gas Annual, September 2021
Note: Wellhead prices not available after 2012.

U.S. average annual residential natural gas prices by state, 2020

WA
ME
MT ND
OR VT
MN
WI
ID SD NY
MI NH
WY
IA PA MA
NV NE
OH
IL IN
UT WV RI
CO
KS VA
MO KY
CA CT
NC
TN
AZ OK NJ
NM AR SC
AL GA DE
MS

TX LA MD

FL DC
AK

HI

$7.00 - $8.99 $9.00 - $10.99 $11.00 - $12.99 $13.00 - $14.99 > $15.00

Data source: U.S. Energy Information Administration, Natural Gas Annual, September 2021

How can residential natural gas consumers reduce their natural gas bills?

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Consumers can reduce their natural gas bills in several ways:

• Shop for lower-priced natural gas if customer choice programs are available.
• Participate in a local natural gas utility's yearly budget plan (if available) to spread natural gas bills evenly throughout
the year.
• Check natural gas space-heating equipment for efficient operation.
• Lower building thermostat settings , especially when buildings are unoccupied.
• Obtain an energy audit to identify other ways to reduce energy consumption.

Federal government programs provide grants to state government agencies for energy assistance to households that have limited
budgets:

• Low Income Home Energy Assistance Program (LIHEAP) distributes funds to states to help low-income households
pay heating bills.
• Weatherization Assistance Program provides grants to states, territories, and some Indian tribes to improve the
energy efficiency of the homes of low-income families.

Additional state energy assistance and fuel fund programs may be available to help households pay energy bills during winter
emergencies. Consumers can find out if they qualify for assistance in their states by contacting the state public utility or service
commission or by contacting the local natural gas utility.

Last updated: October 5, 2021

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