One New Year's Resolution That Always Makes Sense
By Steve Kiesner Director of National Accounts, Edison Electric Institute | October 28, 2008
With the price of natural gas predicted to be lower this winter than last year, you may be tempted to take your eye off the energy bill for a moment. Don't. The smart hotel executive knows that the search for ways to get more value from every dollar spent on energy-both natural gas and electricity-never takes a break. For the New Year, dedicate one of your resolutions to becoming more energy efficient. You'll find the payoff to be greater profitability for your company all year round.
The U.S. lodging industry spends close to $4 billion on energy every year, according to the U.S. Environmental Protection Agency (EPA). If hotels could improve their energy performance by an average of 30 percent, the nation would be breathing even easier, and the hotel industry's annual electricity bill savings alone would be nearly $1.5 billion. This would represent a savings of approximately $365 per available room night per year for every hotel room in the country. The good news is that there are many simple steps your staff can take to use energy more efficiently. And the great news is that electric utilities can help you.
The forecast for natural gas prices
According to the latest Short Term Energy Outlook from the U.S. Energy Information Administration (EIA), relatively high levels of natural gas in storage and a forecast of slightly warmer-than-normal weather (though not as warm as last winter) should result in lower natural gas prices lower this winter. Nationally, hotels and other commercial customers are expected to pay about $11.85 per thousand cubic feet (mcf) of natural gas, which is equal to approximately 10.27 therms, in the first quarter of 2007, and $10.51/mcf in second quarter. Last winter, prices averaged $13.19/mcf in the first quarter, and $11.59/mcf in the second quarter. A few regions, particularly the Northeast, will see higher prices this winter-$14.24/mcf in the first quarter, and $12.94 in the second-than last winter. And keep in mind that although natural gas prices overall are lower this year, the price for a therm of gas is still at an historical high. Today's price is about double the price in the 1990s.
All natural gas consumers-industrial, commercial and residential-are feeling the effects of high-energy prices. High prices for natural gas, heating oil and transportation fuels are having a ripple effect throughout the economy. Utilities that use natural gas to generate electricity also are feeling the pinch. Electric utilities do not benefit from higher energy prices, since they are often "caught" between high fuel costs and regulatory limitations on electricity rates. Like consumers, these utilities are seeking to use natural gas as efficiently as possible and are switching to fuels that are more economical whenever it is feasible.
There are no quick and easy answers to our energy policy challenges. Increasing the supply and diversity of our nation's available energy resources involves long-term solutions. Eighty-five percent of the natural gas consumed in the U.S. is produced domestically, and almost all the remainder of our supply is imported from Canada. New North American supplies and infrastructure need to be developed for the future, especially in those areas that are currently restricted or off limits in the Rocky Mountains and the Atlantic and Pacific coastal areas.