Winter heating bills for people who use
natural gas could be more than 50 percent higher this coming winter
than last, according to an Energy Department forecast.
The department's Energy Information Administration said natural
gas prices have doubled since last year because of a falloff in
production, short supplies and high demand by industry and electric
And the agency in its short-term energy outlook report said that
people -- mainly in the Northeast -- using oil for heating may be in
for steep prices as well, perhaps a repeat of last winter.
Heating oil prices spiked to more than $2 a gallon in New
England and some other parts of the Northeast last winter. The
sudden increases were blamed on higher oil costs, low stocks and
"There is a risk of price spikes similar to last winter in the
Northeast for heating oil as well as for diesel fuel if inventories
are not built to adequate levels by the end of the year,'' the
monthly outlook report said Monday. It said distillates -- heating
oil and diesel fuel -- remain lower than normal as refineries have
focused on pumping out gasoline.
People heating homes with natural gas -- especially in the
Midwest, Ohio Valley and Northeast -- should brace themselves for
higher heating costs, the report warned.
Spot wholesale prices for natural gas have doubled from a year
ago, averaging between $3.50 and $4.50 per thousand cubic feet.
"We are projecting that natural gas price at the wellhead will
increase by about 55 percent this winter (October-March) compared
to last winter,'' said the report. Those price increases in all
likelihood will be passed on to retail customers, it added.
A mild winter could result in prices easing, but severe weather
could cause prices to go even higher, the report said.
It attributed the soaring prices to a shortage of supply and
growing demand as industry and electric utilities shift more and
more to cleaner burning natural gas.
Industrial demand for natural gas has increased nearly 10
percent this year, the report said. Natural gas demand also has
been exacerbated by the hot weather this summer in parts of Texas
and California, where utilities rely heavily on gas for
The American Gas Association reported that in the week ending
July 28 there was 1,920 billion cubic feet of natural gas in
storage, or 17 percent (386 billion cubic feet) less than at the
same time a year ago. The 386 billion cubic feet is equivalent to
about five days of total natural gas consumption in the United