Natural gas rates plunge

Record low overnight temps forced me to dial up the thermostat this morning, bringing back unwelcome memories of last year’s heating bills, which rivaled my monthly mortgage payment.

This year, though, it looks as though we’re in for a break.

Natural gas commodity prices are down 60 percent since the start of the 2009 – about a seven- or eight-year low, according to Kobi Platt, an analyst with the Energy Information Administration at the U.S. Department of Energy in Washington, D.C.

“This is a tremendous swing from last year,” said Platt. “And generally speaking, the lower prices we have seen this year will be passed on to consumers.”

That’ll be welcome news to your readers, so you might want to consider a fall heating outlook soon.

Run it as a personal finance package, contrasting this year’s outlook to last year’s astronomical heating rates. (Keep in mind that the entire natural gas price drop won’t be reflected on residential bills; local utilities have been buying fuel contracts all year at a variety of prices and we don’t yet know what weather or an economic rebound will do to demand.)

You also could stick to a straight business angle by looking at the commercial implications of lower natural gas prices. And they’re more numerous than you might think.

Only about a third of the 20 trillion or so cubic feet of natural gas consumed nationwide each year is used for residential and commercial heath. Another third is used in industrial processes – both as an energy source and as an ingredient in products ranging from fertilizers to plastics. The drop in demand by manufacturers, who’ve reined in production throughout the recession, has a lot to do with the current sky-high inventory levels and low prices.

The final third is used to generate electric power – and with natural gas prices dropping so precipitously, your local utilities might be reducing their reliance on coal even further. That’s another angle to check on, including the implications for electricity rates.

The EIA site’s natural gas portal is a wealth of resources, particularly the narrative monthly short-term energy outlook (sign up for the e-mail feed) and the weekly natural gas storage update – that’s a market mover and a key indicator of future price fluctuations. Don’t worry if you don’t understand this vast and complicated industry – EIA analysts like Platt are available by phone to walk you through the data.

Another angle is retail choice. Some states have allowed competitors to challenge monopoly utilities; here’s an EIA map that shows what’s going on in your area. If you have competitive suppliers, check with consumers to see how that’s working.

Be sure to check with your local utilities themselves and state public service regulators about rates and forecasts, as well as local residential and commercial users.

Come back to Your Daily Tipsheet each morning for advice on where to find sources, background and creative ways to make financial news and trends relevant to your audience.

Revving Up Airline Coverage

Now’s about the time for those midsummer doldrums when we all dream of jetting off to an exotic locale…or even someplace just moderately exciting.

Businesses writers without cash for a trip can do the next best thing - catch up with the airline business.

Even if you don’t have a major carrier headquartered inside your beat, you probably have an airport nearby that employs part of your audience either directly or in ancillary jobs with suppliers, cargo handlers, cleaners, the security force and other support services.

And the aircraft themselves ferry inbound tourists, business travelers and other passengers who leave their economic footprint in your area.

So spend some time developing a dossier on air traffic in your region. Which carriers are dominant? Check out their financials – most airlines are reporting earnings this week – and sign up at their media relations centers for e-mail feeds.

Are there any specialty firms like vacation charter services, corporate jet sharing programs or private shuttles operating out of your region? They – along with hands-on suppliers like the catering companies, the cleaning services, airport concessions operators – can provide useful data about traveler habits as well as interesting fodder for feature stories. For example, why does a snack pack worth $1.99 on land cost $8 aloft, and who gets to pick out the ingredients?

Your airport authority reports are public record; often available on Web sites. Traffic figures, landing fee revenues and other data should point you to key players.
Other helpful sources of data include:

• Bureau of Transportation Statistics - They offer stats including passenger counts, load factors, airport passenger counts and so on.

• Air Transport Association - This industry trade group’s Web site is packed with data and explanations; the ATA spokesman and economists are accessible and in tune with economic trends.

• International Air Transport Association - This is a Montreal-based organization representing 90 percent of carriers around the globe. They're particularly helpful with industry-wide issues, and will frequently offer economists or officers to speak to the media on issues that carriers themselves might not want to comment on. If you cover a major tourist destination, they can offer insight about patterns of foreign visitors.

Fuel is a huge cost factor for airlines; in fact those few who do manage to eke out a profit these days usually do so based on their fuel hedging practices (buying ahead at what they hope are rock-bottom prices.) Check with the Energy Information Administration, the federal fuel-information site, for helpful current and historical info on jet fuel prices.

Another helpful source of data and links: The Aviation Database. This is actually a fee-based consultancy that generates customized reports for people/businesses, but they have an excellent collection of historical stats and links to other sites that have great information.

Despite the hassles of flying these days, aviation is still a rather sexy business that lends itself to consumer pieces or just plain interesting feature stories. So forgive the cliché, but visit your local airport soon and let your writer’s imagination soar.

Come back to Your Daily Tipsheet each morning for advice on where to find sources, background and creative ways to make financial news and trends relevant to your audience.