Natural Gas Prices for Dummies

historical natural gas prices

This week, (probably) purely by accident, we've been seeing a lot of freelance posts written by people who simply did not understand the question. As a result, the answers they've provided have been off-topic, simplistic, half-right, or completely wrong. Today's award ceremony is no exception: we're visiting the Leaf Group niche site Hunker.com, where we caught familiar eHow.com contributor Rebecca Mecomber attempting to explain "How to Calculate Natural Gas Prices."¹ We're pretty sure she failed the assignment, not that anyone at Demand Media noticed...

Mecomber's approach, as probably befits a "former radio personality, now a professional blogger" who has zero energy industry experience, is to explain how to read your gas bill... we kid you not:

"To determine natural gas prices, you need to know how many therms or cubic feet of gas you consume, and how much it costs per one unit..."

...which we found to be pretty much the definition of circularity: Mecomber thinks that to calculate a natural gas price you need to know "how much it costs per one unit"! But wait: wouldn't that be the same natural gas price you're attempting to calculate? Rebecca included two sets of instructions, one of which is to "Determine the Price by CCF" and the other of which is to "Determine the Price by Therm." Both sets of instructions, if you can call them that, start with "Determine the cost of gas per..." But wait: wasn't that what we were supposed to do in the first place? And how do we do that? Obviously, Rebecca thinks that you read it off your gas bill... the idiot.

Mecomber's ignorance notwithstanding, determining the price of natural gas is a complex process rooted in supply and demand; not to mention adjustments made for "quality." Unlike gold or silver, natural gas does not have a specific composition; the price is in part dependent on the energy content, which is dependent on the quantities of different hydrocarbons present in the gas. To repeat ourselves, it's complex.

In other words, it's not simply reading the price off a utility bill -- only someone who has absolutely no  idea what she's talking about would try to pass that off as a method for calculating commodity prices. But wait: that fits Ms. Mecomber to a T, which is precisely why she's collecting another Dumbass of the Day award...

¹ The original has been deleted by Leaf Group, but the Wayback machine at archive.org never archived it. Oh, well, no loss.

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