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Heating Costs to be Higher This Winter

Heating Costs to be Higher This Winter

Posted - Oct. 7, 2003 at 2:53 p.m.



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WASHINGTON (AP) -- With natural gas costing twice what it did a few years ago and crude oil at $30 a barrel, homeowners can be sure of one thing: This winter's heating bills will be expensive, even if the winter is not severe.

And there is no guarantee the weather will cooperate.

The Energy Department said Tuesday it expects wholesale natural gas prices to be 9 percent higher this winter than last, at between $4.50 and $5 per 1,000 cubic feet.

Only a few years ago it was in the $2.50 range.

How much of the increase will be felt by homeowners and businesses will depend largely on how cold it gets, federal officials said.

If a severe winter increases fuel use, residential users of natural gas could pay an average of nearly $1,000 this winter to heat their homes, about 22 percent more than last winter, according to the Energy Department.

While normal weather would require less fuel to be used compared with last winter, heating costs still would increase about 5 percent on average ($841 for the season) because of higher fuel prices.

Those who heat with oil, a widely used fuel in the Northeast, could see heating bills drop by 8 percent from last year ($927 for the season) if the winter is normal -- and if the price of crude oil prices were to stabilize.

Given a colder than normal winter, however, heating oil costs would be expected to jump by as much as 17 percent on average over last winter, to $1,084 for the heating season, officials said. Propane users can expect a slight decline if the weather is normal ($1,094) but could pay 16 percent more than last year ($1,301) in a severe winter.

"The key factor as always in winter is the weather," said Guy Caruso, head of the Energy Information Administration, the department's statistical agency, which issued its winter fuels forecast Tuesday.

He said supplies are tight not only for natural gas but as well for crude oil and petroleum products, including heating oil. "There's not a lot of cushion if something goes wrong," Caruso said.

As for predicting the weather, Mike Halpert, head of forecast operations at the National Oceanic and Aeronautics Administration, said there's no way to predict which way the wind will blow.

"It's pretty much a tossup," said Halpert, asked at a conference of state energy officials whether the coming winter would be mild or severe.

David Terry, managing director of the National Association of State Energy Officials, said after a year of surging natural gas prices, soaring summer gasoline prices, a major electricity blackout and volatile crude oil prices, people are worried about what might come next.

"There's more of a heightened sense of urgency," Terry said. The state officials are responsible for dealing with state energy emergencies.

He said the higher fuel costs will affect many people already facing hard economic times and put additional economic pressure on already-strapped state and local school district budgets.

Caruso said supplies of natural gas, heating oil and propane should be adequate.

The industry is expected to exceed the goal of putting 3 billion cubic feet of natural gas into storage by Nov. 1, an amount viewed as comfortable as winter approaches.

Much of that gas was bought when costs were higher than they are today, however, at times more than $6 per 1,000 cubic feet, meaning the additional cost will be passed to consumers in the months ahead. The spot price Monday for natural gas was $4.46 at the Henry Hub market center in Louisiana.

The cost of heating oil is expected to average about $1.33 a gallon, about the same as last winter, although increases in crude prices or unusually cold weather could add 8 to 16 cents.

Crude oil prices would continue to stay around $30 a barrel through the winter "primarily because of OPEC's decision to lower oil production quotas," the agency said.

(Copyright 2003 by The Associated Press. All Rights Reserved.)

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