
Your Stake in the Gas Crisis:
An Interview with YJay Draiman,Director of Marketing
U.S. Gas, Electric & Telecommunications
With natural gas prices reaching epic proportions in
recent months, the Builder spoke with Jay Draiman, a
leading broker of natural gas and utilities, to see what
landlords, developers and property owners can do to
lessen the impact of a rapidly worsening gas situation.
The Builder: As far as gas is concerned, can you briefly
review what gas prices have been in recent months –
specifically in December, January and February?
Draiman: Well, prices peaked in January. And December
prices were somewhere in the upper $.60s, $.70s per
therm and in January they went anywhere from
between $1 to $1.20 per therm. So that by January gas
prices had tripled over the previous year.
The Builder: And how does it look as far as February
and March are concerned?
Draiman: February was down by about 25 percent.
March has seen a further decline of approximately 15
percent. I estimate that the price of natural gas will settle
somewhere between $.58 to $.62 per therm, roughly
double the cost of gas last year, for the near future.
The Builder: We understand that Peoples Gas Co. was
agreeable to setting the price of gas at around $.34 per
therm and they were rejected by the Commerce Commission,
is that right?
Draiman: The problem was due to several factors – it
was not just the city or Peoples Gas. Peoples Gas wanted
to set a price that it felt was reasonable so that they
could buy gas at a fixed price for the next year or so
about 18 months ago. This was a tariff item which had
to be filed with the Commerce Commission, and there
was a lot of discussion back and forth about setting a
price for gas. At that time Peoples Gas was asking for a
fixed price of about $.34 a therm. But the market was
going for about $.25 or $.26 a therm. So many people
were against setting a price which they felt was 40 percent
too high.As a result, they were unable to fix a price
and the deal fell through.
Peoples Gas was actually willing to guarantee the consumers
gas at the price of $.34 a therm, which as we
know today would have been terrific, but hindsight is
always easy to come by when you are dealing with such
emotional issues.
The Builder: What are some of your suggestions for
helping to keep gas costs as low as possible?
Draiman: Number one, make sure that your boilers are
firing properly.Make sure that the insulation is proper,
which does not necessarily mean that you will pay less
for gas, but it does make for greater comfort for the tenant.
This could mean physical insulation or storm windows
or replacement windows that help to block the
wind from coming in.
While this will not necessarily save the building
owner more money, it will give the tenant more of a
comfort level so that they do not have winds coming
through the windows.
When you figure the cost of installing the insulation
against the total income, you won’t save any money,
but if your tenant is comfortable, you won’t get
many complaints.
Also, they are saying that you may not see a dollar per
therm next winter, but you may see another $.80 per
them for next winter. So some are talking about the
possibility of trying to lock in prices now for at least
the next 12 months at anywhere between $.50 and
$.60 a therm. And this can be done very simply
through our office.
This would be for one year only. You don’t want to do
that for any longer a period, because we are hoping
that production will catch up with demand by the
Spring of 2002 and by then prices should be winding
down somewhat.
The Builder: You also mentioned that in the East many
buildings have dual gas and oil heating systems. Can
you explain the advantages of that, please?
Draiman: Yes, that’s true. On the East Coast, there are
a lot of buildings that have boilers which work on
both natural gas and oil. If natural gas is cheaper than
oil, they use natural gas and vice versa. As a result of
lower natural gas prices at the time, they were all using
natural gas. This put a greater strain and demand on
natural gas prices. And of course, you have to realize
that the electric company is using more than a third of
the natural gas production in the United States. So if
we have another very hot summer, you are going to
see another big increase in the cost of natural gas
because the electric companies are using so much natural
gas to make electricity.
The Builder: Do you have any further suggestions as
to how landlords can help to control the escalating
prices of natural gas?
Draiman: For one thing, you should make sure that
all radiators are properly vented and the pipes leading
to the radiators – those with number 5 vents on the
pipelines – are also properly vented. Also make sure
that every one of the radiators is very slightly tilted to
the valve so that when the steam evaporates, the
water drains right back down into the system That
way you don’t get that banging noise on the radiators,
which is caused by improper drainage – caused when
the steam is hitting the water and it is coming back
down in the system.
The most efficient heating that you can have is hot
water heating. And it’s the most economical of all
forms of heating.
Finally, make sure that you have good control of your
boiler – so that they do not get off calibration. If the
boiler controls are out of calibration, you could wind up
wasting between 15 to 20 percent of your gas.
YJay Draiman can be reached at (847)274-3100.