Newsletter Articles : Gas Pricing

Recently I received a call from a very upset customer of a competing gas company. The caller advised me that his gas prices were going up and he thought he was being "hosed" by his current supplier.

He said "Gas is gas and you just get it from the air. The air isn't any more expensive than it was ten years ago so the price of the gas should be the same." He wanted to do business with a gas company that would hold their prices for a few years. Following a patient wait, while he ranted, I was able to explain to this caller that there was an extensive procedure to follow to extract gas from the atmosphere.

In simple terms, many of the gases used in industry and laboratories are derived from the atmosphere via an air separation plant. Atmosphere is drawn into the plant and separated into various categories by temperature. Oxygen freezes at one temperature, Argon at another, Nitrogen at still another and these liquefied gases are sent to storage for processing.

This is a sophisticated process but it is repeated at air separation plants around the world. "So why the increase in price?" The customer asked. The answer was simple. The extraction of these gases from the air and the process to make the separation takes an enormous amount of energy. Air separation plants are the biggest users of electricity in whatever state they are found.

My caller friend was from Portsmouth NH and was very familiar with the presence of an air separation plant just over the bridge in Kittery, ME. I advised him that last I knew, that plant was the biggest user of electricity in the state of Maine. The power grid that serves the plant will keep the plant on line but it comes at a premium of cost. The plant will pay a higher electricity fee to be kept on line. This higher cost for energy translates into a higher cost for gases.

The gas business is very competitive and prices may vary from supplier to supplier but I assured the customer that a gas company that is not adjusting its pricing on the gases it sells to reflect the price of energy will not be in business long.

For my patience and effort to explain the situation I was rewarded with a new customer. Sooner or later his pricing will change, but at least now he understands why.

For answers to any questions regarding gases or gas related equipment please call the experts at Middlesex Gases & Technologies. We are here to serve.

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