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Restaurants hit hard with massive natural gas bills during recent price spike

Restaurants hit hard with massive natural gas bills during recent price spike
Restaurants hit hard with massive natural gas bills during recent price spike 02:43

SAN JOSE -- California consumers are getting sticker shock when they look at their utility bills after natural gas prices spiked about 32% since December, according to PG&E.

The increase is especially hard hitting for restaurants that cook with natural gas.

Restaurant cope with natural-gas prices
Restaurant cope with natural-gas prices. CBS

"There's a huge spike in costs, and it's very concerning for business owners," said Jess Moreles, the Operations Manager for three downtown San Jose restaurants including Farmers Union, Blanco and San Pedro Social.

The utility bill for Farmers Union, which includes gas and electricity, shows wild increases over the past three months.

"Coming out of last year in December, we were at $4,800.  And then in January of this year, costs skyrocketed to $7,348 and then subsequently this past February, our bill was actually $12,858." Moreles said.

"I'm not aware that we've every had a shock to natural gas prices anything like what we saw in December and January before," said Severin Borenstein, the faculty director of the Energy Institute at the Haas School of Business at UC Berkeley.

"We've had very short term price hikes, a day or three days.  But this one lasted all of December, January and into February," Professor Borenstein said.

PG&E said it is not to blame.

In a statement, the company said, "PG&E does not control the market prices for gas and electricity and, like other utilities, does not mark up the cost of gas and electricity that it purchases on behalf of its customers."

The higher prices are the result of an almost perfect storm of factors.

A major gas pipeline between Texas and California has been shut down for 18 months, limiting the supply since California imports 90 percent of its natural gas.

The abnormally cold weather across the country and here in California also means usage has gone up significantly.

"The West Coast has not been able to get enough gas into the area," Borenstein said.

Moreles says his restaurants are holding the line on menu pricing and energey costs come back down to earth.

"Any blip to expenses has a ripple effect, and we just want to make sure we can manage it effectively," he said.

PG&E says relief is coming.  The utility projects prices will drop an average of 76% in March as supplies increase and Califoria energy credits are applied.

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