Wednesday, October 8, 2003

Business

Feds offer some cold comfort
Heating bills may soar, Energy Department warns

H. Josef Hebert
Associated Press

WASHINGTON _ 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 also 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 Atmospheric 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 that 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.


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