Whatever Happened to Low Natural Gas Prices?

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Whatever Happened to Low Natural Gas Prices?

Have you ever wondered what happened to the Long Beach Gas Department’s landmark gas holder at Spring and Junipero, or the Public Utilities Building at 215 W. Broadway? Or, more recently, why your natural gas bill was so high, especially since at one time Long Beach had the lowest natural gas prices in Southern California?  Before I answer the questions, a little history.

Long Beach airport and Signal Hill (1927). Note the gasometer storage tank  that lasted until the 19… | Long beach airport, Long beach california,  California history

Courtesy Long Beach Public Library

On May 26, 2024, the Long Beach Gas Department, now part of the Long Beach Utility Department will reach its 100th Anniversary, but the idea for Long Beach to form its own gas company began in 1923.  However, the idea for providing domestic gas service goes back to 123 years.

In 1900, Long Beach introduced domestic gas service to its residents by contracting with the United Electric Gas and Power Company, predecessor of today’s Southern California Edison (SCE). Other private companies formed, all serving natural gas to local consumers. The demand was great, especially since by 1905 the population of Long Beach had grown to 15,000, of which 4,000 were actual gas consumers. In July 1910, through mergers, a single company incorporated — the Long Beach Consolidated Gas Company.

One competitor was the Southern Counties Gas Company (later consolidated into the Southern California Gas Company) who purchased all of Southern California Edison’s gas operations in Los Angeles and Orange counties in May 1916. At the same time, Long Beach Consolidated Gas sold their Long Beach gas lines to Southern Counties, with the agreement Consolidated could continue to use them.

In 1921, when oil and natural gas were discovered in the Signal Hill oil and gas field, suddenly, there were enormous quantities of natural gas in the immediate Long Beach area. Certain city leaders firmly believed that this gas could and should be delivered to local residents at a cost much less than that being charged for the same gas by the privately-owned gas utility, Long Beach Consolidated Gas Company.

Encouraged by public opinion, a special election was held in April 1923 for Long Beach voters to decide if $3 million ($47.6 million in 2021) in bonds should be issued to acquire the local gas facilities. The measure was overwhelmingly approved by an 8 to 1 margin and the Long Beach Gas Department was on its way to becoming a reality.

However, the Southern Counties Gas Company decided to play hard ball and refused to negotiate a fair purchase price with Long Beach for the purchase of the local gas lines. The battle was on. Long Beach countered by constructing a competing, duplicate gas system and Southern Counties decided to lower the price of natural gas to consumers. The reduction in rates had, however, been too long delayed to head off municipal ownership and Southern Counties was now facing a losing battle.

By March 1924, all consumers along the route of the new pipelines were being serviced, as promised, by the new Long Beach Gas Department. The next month, as Southern Counties fully realized it had lost the battle, it offered to sell its old distribution system to the City along with the storage plant and equipment. The City accepted the asking price of $2,170,000 ($34.4 million in 2021)

On May 26, 1924, the Gas Department took over complete operation of the gas system in Long Beach. By then, the City of Long Beach had invested $3 million in purchasing the old utility system, including new feeder main pipelines from the Signal Hill field to the storage plant, new pipelines throughout the downtown district, and materials and supplies to operate its new utility.

Soon the Gas Department’s rates were saving Long Beach residents and businesses almost 30% of what they had previously been paying the private utility. In addition to the huge savings, the Gas Department’s revenues covered all operating and other expenses, bond interest, as well as funding of an adequate cash reserve for accrued depreciation and bond retirement.

Now the bad news: Other privately owned gas companies were using the natural gas produced on Signal Hill. Long Beach had to rely solely on gas from the city owned oil fields. By 1925 that was not enough to meet consumer demands. Gas now had to be brought in from other gas fields, including Dominguez, Rosecrans, and Ventura. However, the Wilmington Oil field became the main supplier. From 1938 through 1952, virtually all gas used by the Gas Department came from the Wilmington Oil Field, peaking at 72 million cubic feet of gas per day in February 1951.

To make a long story short: today Long Beach must now compete with other gas companies for natural gas, which is why your natural gas bill skyrocketed this winter as demand outweighed supply.

Oh yes, what happened to the Gas Department’s 1927 landmark gas holder at Spring and Junipero? It’s interesting to note that despite the sheer size of the holder with its all-riveted design and the rather crude equipment available back then, construction time from start to finish was only seven months! In contrast, in preparing to demolish the holder in 1997, it took more than two years to simply empty the water out of the holder due to new environmental regulations.

This 24-story tall holder was built right next to the Long Beach Airport and the inevitable happened on a foggy day on October 18, 1974. A Piper Aztec plane took off from Long Beach airport and made a wrong turn in the fog, crashing into the large gas tank holder and then to the ground. Four passengers perished in the crash and one other was seriously injured. There was also some slight damage to the gas holder. Municipal utilities building

What of the Public Utilities Building at 215 W. Broadway? During the height of the Great Depression in the 1930s, the Gas Department funded the building at 215 W. Broadway. The construction was part of President Franklin Roosevelt’s newly formed Works Progress Administration (WPA) and opened in 1939. This building housed the gas and water office personnel as well as the commercial services operations. The Public Utilities Building was one of three significant buildings at the site along with City Hall and the Veteran’s Administration building. The Public Utilities Building was torn down in the 1970s to make room for redevelopment which necessitated the need to construct a replacement building at the 2400 E. Spring Street site to house the Gas Department.

In November 2022, Long Beach voters decided the city’s water, sewer, and natural gas services would now be provided by one Public Utilities Department. Hopefully, this will prove to be a cost-effective move.