HTLA- Episode 62: Why You Spent Half Your Paycheck On Your Gas Bill

Brian De Los Santos  00:00

If you're like a lot of people I know, you just used half of your paycheck toward your gas bill.

Ruth Calichman  00:06

[music in] My name is Ruth Calichman. My gas bill for January was $782. And typically, I would say around this time, it's usually like around $300 or $350.

Sharon McNary  00:17

This is Sharon McNary. A year ago in January, my gas bill was $127. This January, it was $356 even though I used less gas.

Carlo Giovanni  00:32

My name is Carlo Giovanni. My gas bill is usually $150. But last month, it went up to $479. Take into consideration that it's just me and my dog in my apartment.

Taylor  00:43

My name is Taylor. I live in Santa Monica. I have such a high gas bill this month. It's almost $300. It's really tricky because our apartment gets very, very cold and we have a baby, so we can't not use the heat.

Brian De Los Santos  01:00

From LAist Studios, I'm Brian De Los Santos, and this is How to LA. The price to heat your home has been kind of out of control, like three times what people typically pay each month. The thing is, the gas price spike is actually a California thing. Costs are actually down in other parts of the country. Now the good news is, in case you missed it, the price spike is expected to fall. Your next energy bill won't be nearly as pricey as this last one.

William Boyd  01:29

The expectation in February- and they've already locked in these prices- those prices are gonna come down quite a bit.

Brian De Los Santos  01:36

But prices are still well above what they were last year. I don't know about y'all, but that money spent on heating lately could have been used on a whole lot of other things in my world, like Beyoncé tickets. [laughs] So we wanted to understand why has it been so high? And is that gonna be the norm come every winter in California? Let's break it down with William Boyd from UCLA's Institute of Environment and Sustainability. He's gonna give us the expert lowdown. [pause] Hey, William.

William Boyd  02:08

Hey, Brian. How you doing?

Brian De Los Santos  02:09

Great. Thanks for being here. [music out] So I know it was extra cold, but how much does the weather actually affect our gas bills?

William Boyd  02:18

So the cool wet weather that we've had so far this winter in California has definitely had an impact on our gas bills. But I think we need to put that in the broader context of what's going on in the national natural gas market. Obviously, one of the big factors that has affected natural gas prices over the last 18 months or so is the Russian invasion of Ukraine, which has created all kinds of constraints for the European Union, the member countries there, many of which were heavily dependent on Russian natural gas. And so they've had to go find new gas supplies, and they've looked to the United States. And so there's been a lot of liquefied natural gas being exported from the United States to make up the difference. That has created some pressures in the domestic natural gas market. But in general prices in the United States are back down to where they were before the invasion. But the prices vary quite a bit across the country. And California is sort of at the end of the line, if you will. There have been some pipeline constraints. There are some storage issues. Um, there are some issues going on with the electric power sector. All of those together have created additional pressures on natural gas and getting natural gas to California to provide the additional gas needed for heating this winter.

Brian De Los Santos  03:33

And I read somewhere that a pipeline issue in Texas is affecting what we pay for gas here in Los Angeles County. Why doesn't it hit other states as much?

William Boyd  03:43

Most of our gas here in California is coming from the Permian Basin in Texas and some is coming from Colorado, but it's coming from out of state and to move natural gas, obviously, you need to ship it through pipelines. It's somewhat expensive to transport it. It's about 20 times more expensive to transport natural gas than it is to transport oil, for example. So when you have pipeline capacity problems and constraints on the ability of the pipelines to move gas from the supply regions, from the gas fields in Texas, to California, that obviously then cuts back on the amount of supply that's available to provide the needs for the demand of the retail customers. And so there's a particular set of pipelines coming from Texas that have had some constraints and some capacity issues. And that has contributed to the big surge in prices that we've seen in January.

Brian De Los Santos  04:32

Now we know from SoCal Gas that prices will be dropping by a lot. I mean, that's kind of quick. Do you know exactly what happened there?

William Boyd  04:39

What happens is that SoCal Gas, San Diego Gas & Electric, PG & E, the big sort of retail gas suppliers in California, they're typically buying gas on monthly contracts that have a pricing term in those contracts where the prices are tied to an index of gas trades. And those indexes change month to month depending on the relative availability of gas. And so that goes back to the general state of the natural gas markets. Traders, people that are buying and selling gas are looking around the country. They're looking at the Russian invasion of Ukraine. They're looking at the additional demand from European countries. They're looking at a cold, wet winter. They're looking at less hydropower coming down from the Northwest to California, which then requires more natural gas generation in California. All of that together, in addition to relatively low storage are creating kind of constraints. And I think that's what drove the big run up in prices. Some of that has subsided now. And I think now you see prices going back down.

Brian De Los Santos  05:46

I'm curious if there's any way that the governor or local congress people can affect change here, because [laughs] if, if uh, international affairs are impacting states as ours, is there any way that the markets can change with some regulations?

William Boyd  06:04

Longer term, I think the solution is electrification. And then working hard to make sure that electricity prices are stable and affordable. And so as we decarbonize the power sector, and as we electrify heating, cooking, and transportation, electrification becomes really the dominant climate strategy in California. There's a way in which that could provide a lot more stability in terms of you know, utility bills. But that really depends on how the Public Utilities Commission decides to design the rates for electricity.

Brian De Los Santos  06:44

So I want to turn to you and ask you, your expert tip or trick to when these high prices eh, come through your bill, what do you usually do? Are you preparing yourself?

William Boyd  06:57

There's not a lot you can do to reduce your demand for natural gas for cooking and heating. You can certainly turn your thermostat down, but how far down do you want to go? And how cold do you want to be? So the bigger issue here is, we the public need to think long and hard about how those necessities are being provided and how they're being priced. And it strikes me that we should be working with our public utility commissions, our legislators, the governor and others to come up with better ways to price energy across the year so that we don't face bills in January that are 380% of what they were the year before or even a few months before. Economists would say that the demand for natural gas and electricity- It's very inelastic. It doesn't respond a lot to price increases because this is a necessity. So sure, there's investments we can make with weatherization, and we can wear more sweaters, and we can do all of that. But in the long run, people don't want to make massive adjustments in their demand for something that is a necessity, like energy.

Brian De Los Santos  08:02

[music in] So to recap folks, the cold wet weather we've experienced lately, does have some impact. But these price hikes are mostly due to national and international systems that are a little bit complicated. The Russian invasion of Ukraine last year created supply issues in the EU, where a lot of countries are dependent on Russian natural gas. That led to the huge spike in gas prices we all saw at the pump throughout the year. Now, those numbers have almost leveled out, but constraints and capacity issues from the gas fields in Texas put pressure on national gas supply, which we saw reflected in January's bill. Now we have confirmed that gas prices in February are gonna be a lot lower. But gas prices will remain volatile moving forward. And as William said, basically, only the government can step in here to mitigate and stabilize costs for consumers. But as a person who rents, I really want to know how to spend way less on heat with or without a price hike. LAist reporter Caitlin Hernández researched some tips on how to stay warm inside your homes. And I'm here for all this. [pause] [music out] Hey, Caitlin. [Caitlin: Hi.] So everyone is talking about the gas bill. You delved into the story, and you researched some tips. What are some things that you learned?

Caitlin Hernández  09:22

You know, I think it's important to talk about this realistically. It's been cold, and so we're gonna be using heaters even though it's like expensive. So just figuring out how to use that smartly I think is important. For example, you could only use your heating equipment later in the day. You can you know, adjust the thermostat. There are also like free things you can do to kind of like keep your home warmer. You can open up your windows during the day and let the sunlight in, and then during the night you'd close it because it blocks out like the cold draft that your windows can get. That's like some small things you can look out for especially if you have like hardwood floors that can crack up or like your baseboards. All of that can contribute to what's called 'leak heat.' You know, you can honestly just grab a little caulking stick that you get from Home Depot [Brian: Mmm.] or something, and just go along those baseboards and look for little gaps, look for holes, and that will really make a difference in the long run.

Brian De Los Santos  10:13

I'm not such of a handy person, but you know, if I gotta protect the heat, I will do that honey, 'cause it gets cold in some of these apartments. And you also reported that you can use your fan to maybe maximize the heat inside of the home too?

Caitlin Hernández  10:30

Yes, [laughs] probably sounds really counterintuitive. And when I looked it up, I was like, Oh yeah, that's right. When I was young, my family's home had like a whole house fan, which is like those big industrial fans that are up in like the ceiling. And when it would get cold outside, we would turn it the other direction because it had that function. And it pretty much would like suck up the cold air and like help disperse the hot air that was in the house because hot air rises. [Brian: Mm.] So if your ceiling fan, if you have one, if you can change the direction, you should make it spin clockwise. And that'll create like an updraft to circulate that warm air.

Brian De Los Santos  11:04

I also wanted to ask you about people who are renting, right? Not everyone owns a property here in LA, because it's expensive. Do you know if landlords can take care of any of this stuff?

Caitlin Hernández  11:14

I always recommend before you do anything to your apartment, like, that you should ask your landlord first. I think when it comes to these little fixes, it might not be a big deal if you're like caulking, for example. But if you're gonna be making like any other big adjustments, like weather stripping your windows, things that are gonna be an investment, not only is it just good to make sure your landlord's aware of it, but you also maybe don't need to be fronting the money to do that because you don't own the space. So it's good to just be like, Hey, can I get reimbursed with this? You know- Can I get something knocked off of my like rent amount for that month? They might even you know, be great and have a handyman come in to do it. [music in] And one more thing that people should be aware of is that if you have SoCal Gas as your utility provider, they actually have a program called Level Pay Plan. And you can kind of use that to smooth out the ups and downs of your bill throughout the year. So what they'll do is they'll kind of average out your past history use and like the projected annual cost they do for gas, and you'll pay that amount instead of your actual usage throughout the year.

Brian De Los Santos  12:15

I love that tip. Thank you so much, Caitlin. [Caitlin: Thank you!] Alrighty, y'all. Hopefully all this was helpful for you, and maybe you start caulking those windows. [laughs] Also to note, California's Public Utilities Commission is issuing credits to offset these natural gas bills. So some Angelenos might be getting some relief. Special thanks to LAist's Caitlin Hernández and William Boyd from UCLA. We got a link to that story from Caitlin in our show notes and we'll have it online at LAist.com/HowToLA. You can subscribe to the podcast and our newsletter there, too. We'll catch you tomorrow. Hasta luego. Support for this podcast is made possible by Gordon and Dona Crawford, who believe that quality journalism makes Los Angeles a better place to live. [music out]