Commodity costs along with transmission and distribution costs contribute to the price of natural gas in the United States. Commodity costs relate to the actual cost of natural gas. This is commonly referred to as the wellhead cost. Transmission and distribution costs refer to the cost of moving natural gas by pipeline from the production site to customers’ local gas company. The natural gas cost also includes the expense of delivering natural gas from the local gas company to businesses and residences. The price of natural gas is additionally impacted by taxes and tariffs.

Domestically the natural gas commodity cost represents more than fifty percent of the price of natural gas to residential customers. Before the end of 2001 through the beginning of 2002 the commodity or wellhead cost was less than half the total residential price but the commodity cost has increased. This has occurred because the cost for natural gas has increased over the past ten years.

Between 1999 and 2008 the average natural gas cost paid by residential consumers increased by more than one hundred percent. The difference in cost between states is frequently related to the market’s proximity to production areas, the number of delivery pipelines in the state, the average consumption per residence receiving service, and the transportation costs associated with delivering natural gas service. State regulations and the level of competition between natural gas suppliers in the state also impacts natural gas cost.

Natural gas cost varies from state to state, within counties, cities and towns, and even within neighborhoods depending on the provider. In 2009, the last date data was compiled, United States residential gas costs ranged from $8.45 per thousand cubic feet to $36.37 per thousand cubic feet.

The rising natural gas cost, or wellhead cost, is affected by a number of factors. Since 2001-2002 the weather has been colder in the United States and cold weather has lasted longer than normal. These lower temperatures have not only meant colder and longer winters but cooler springs, summers and autumns. The cost increase is also the result of increased use of natural gas for electric generation. Production interruptions have been caused by hurricane activity in the Gulf of Mexico and from variations in the amount of natural gas imported from overseas. In recent years the price of crude oil has reached record highs.

Residential customers can reduce their natural gas bills by performing some comparisons and researching the regulations within their state and municipality. If the state has a customer choice program people can shop for a lower cost for natural gas. Residents can also participate in their local gas company’s yearly budget plan to prorate gas costs evenly throughout the year and mitigating the impact of higher prices.

Your personal cost for natural gas service can be lowered by adopting some simple habits. If your household runs appliances or heating and cooling systems on natural gas, they should be monitored to make sure they are operating efficiently. Replacing natural gas powered appliances and systems with ones that meet energy efficiency standards will also reduce the cost to your household. Keeping the thermostat turned down a few degrees in the winter and up a few degrees in the summer will also help control costs.

If you are thinking about switching from your electric company to a new electricity supplier or