Colder weather, higher bills ahead

WASHINGTON -- Residential heating costs are projected to soar this winter to more than $1,000 on average because of higher fuel costs and expected colder weather, the government said Wednesday.

People will pay on average an additional $133 to $270 to heat their homes when compared with last winter, which was seen as an unusually expensive heating season.

Now that crude oil has climbed above $50 a barrel, the wholesale cost of heating oil has nearly doubled, compared with last year's. Natural gas prices have risen in recent weeks to more than $7 per thousand cubic feet despite reports of adequate supplies. It was in the $4 to $5 per thousand cubic feet range earlier this year.

"Higher [fuel] prices combined with a projected slightly colder than normal winter season mean that most households and businesses will be paying more for heating fuels -- natural gas, heating oil propane and electricity -- in the coming months," the Energy Information Administration said in its winter outlook report.

The Energy Department's statistical arm said that heating oil users will see the sharpest increase with an average heating bill of $1,223 for the season, compared with $953 last year. That comes to a 28 percent increase.

But natural gas customers will be hit as well. They are forecast to pay $1,003, compared with $870 last year, an increase of 15 percent. Users of propane are expected to see a 21 percent increase to $1,396 for the heating season.

The agency warned that the projections are based on a normal winter and that costs could be even higher in regions with significantly colder weather.

Government weather forecasters said Wednesday that the Southeast, Mid-Atlantic and Gulf Coast states can expect colder conditions this winter. Warmer-than-usual conditions are likely in Alaska and the West.

The outlook for the Northeast, Midwest and parts of the Southwest was uncertain and could go either way, according to the National Oceanic and Atmospheric Administration.

The energy agency said heating oil inventories "appear to be adequate to insure against unanticipated demand changes," even if there is severe weather. But demand surges could cause prices to spike, the agency said.

A colder-than-projected winter could mean an additional 15 percent to 18 percent in heating costs, depending on the fuel, the agency said.

A surge in winter heating costs has been expected in light of high crude prices and a recent jump in natural gas prices.

Heating oil for delivery in November increased Wednesday to $1.42 a gallon, 70 percent higher than a year ago, on the New York Mercantile Exchange. Crude oil edged up to $52.02 a barrel; both were records. Natural gas is 42 percent more expensive than a year ago, with the price for November delivery at $7.045 per 1,000 cubic feet.

At a Senate hearing Wednesday, energy industry representatives predicted that natural gas prices would remain high because of a tight market where supplies are barely able to meet demand.

"We feel a little bit better than last year about the natural gas supply situation, but only marginally so," said Paul Wilkinson, a vice president at the American Gas Association, which represents gas utilities.

He said weather will be the biggest factor determining what consumers pay for home heat this winter. Utilities are trying to hold down costs by using slightly cheaper gas already in storage.

Wenonah Hauter of Public Citizen, a consumer advocacy group, said the government should require "just and reasonable pricing standards" for gas markets and stipulate a minimum storage supply of gas.

The owner of a metal treating company said high natural gas prices are threatening thousands of small businesses that rely on the fuel for electricity and production.

"We are limited in our ability to pass energy costs on to our customers" because they can turn to foreign suppliers, Gary Huss, president of Hudapack Metal Treating Inc., which has plants in Wisconsin and Illinois, told the Senate Commerce subcommittee.

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On the Net

Energy Information Administration: www.eia.doe.gov