Replies to This Discussion

Permalink Reply by Gale on November 9, 2010 at 16:46

Yeap over the 20+ years we've had wells the weather is the driving force, of course I stated this last week and basically was wacked with a wet noodle, but oh well I know what my checks have done over the years. I pray for a arctic blast to last for 6 months of the yr and 100+ the other 6 months. It's busy unlike any another money making venture. So freeze please!!!

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Permalink Reply by Gale on November 9, 2010 at 16:47

Oops that's business not busy. LOL

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Permalink Reply by Jack Blake on November 9, 2010 at 16:50

An arctic freeze is coming cried Jack Blake!!!!!!!!!!!!!!!!!!!!!!!!!!!1 Gas rises above $5.00 in Feb of 2011!!!!!!!!!

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Permalink Reply by P.G. on November 9, 2010 at 17:54

Gas above $5? I'm already paying Centerpoint $10!

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Permalink Reply by Skip Peel - Mineral Consultant on November 9, 2010 at 18:01

We're talking price at the wellhead, not what CenterPoint charges you on your residential gas bill. No one here is getting paid royalty on $10/mcf gas.

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Permalink Reply by P.G. on November 10, 2010 at 2:31

Why not?
Someone is pocketing that money!
Just a shame it isn't mineral owners..

Centerpoint claims they don't mark it up but someone certainly has.

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Permalink Reply by FXEF on November 10, 2010 at 3:56

It's the handling and delivery fee that raises the consumer price.

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Permalink Reply by The_Baron on November 10, 2010 at 4:43

if you believe that i have a bridge to sell you.

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Permalink Reply by FXEF on November 10, 2010 at 5:16

Baron,

The handling and delivery is how CenterPoint turns a profit.

Permalink Reply by Les Bamburg on November 10, 2010 at 16:42

Baron, obviously you have never run a gas distribution business. The insurance costs alone are enough to break a company.

Permalink Reply by Robert Duke on November 10, 2010 at 20:59

I am sort of with the Baron on this one... Perhaps the utilities are allowed a rate based on some assumed wellhead cost to them, and when the wellhead cost goes below that, they can just pocket the profit? In the current environment, they would have to be doing rather well I would think... If it costs 2 to 3x as much to insure against disasters and distribute as it costs to get this stuff out of the ground, then I would think there must be an awful lot of expensive disasters (or rich insurers) and substantial upkeep costs on the distribution system...

Permalink Reply by Les Bamburg on November 11, 2010 at 17:49

Robert, the consumer price is based on the purchase price paid by the utility plus the cost of transportation thru the distribution network (and interstate pipelines) and operation of the consumer meter.

By the way, the utility typically is purchasing gas off the interstate (or intrastate) network rather than in the field or at the wellhead.

You are correct that it is very costly to operate and maintain distribution systems. It is not as much about rich insurers but rather our litigation happy society.

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