Winter Heating Bills Set To Soar
Thursday, September 15, 2005
This summer's gasoline price shock will be followed by a similarly sharp jump in winter heating bills in the Washington area, analysts are warning, and fuel bills will leap even higher if forecasts for unusually cold weather prove true.
Winter heating costs have followed in lockstep with the rise of crude oil and natural gas prices, as supplies of energy commodities strain to keep up with growing demand for fuels worldwide. Natural gas prices paid by consumers have doubled since the beginning of 2000, and the increase in heating oil costs has been almost as great.
Consumers nationwide are expected to spend 34 percent more for heating oil this winter than last, 52 percent more for natural gas, 16 percent more for coal and 11 percent more for electricity, according to the preliminary winter fuel projection by the government's Energy Information Administration. The heaviest burden should fall on natural gas customers in the Midwest, the EIA predicts, with costs 71 percent higher than last winter.
The winter fuel increases will bring total energy spending for the nation to just over $1 trillion this year, 24 percent higher than in 2004, claiming the biggest share of U.S. output since the end of the oil crisis 20 years ago, the EIA said.
The higher fuel prices pose a severe threat to low-income households from the Midwest to the Northeast, said Mark Wolfe, executive director of the National Energy Assistance Directors' Association. "A few years ago, you could heat a home for $500. Now it takes $1,500," said Wolfe, whose association represents state residential heating assistance programs. "Energy has become a lot less affordable for low-income families," and they will face painful spending choices this winter, he said.
The important wild card this winter is not price, but weather. Energy analysts are pointing to forecasts such as the current AccuWeather Inc. projection of an early arrival of much colder winter weather from Maine to the District.
Kenneth Reeves, AccuWeather's senior meteorologist and forecasting director, said winter temperatures in the Northeast are expected to be three degrees lower than a year ago, throughout the winter heating season. A persistent temperature drop over three months of winter has a big impact, he said.
Almost all of the nation east of the Mississippi River is in for colder winter weather, AccuWeather forecasts, citing an unusually large area of warm water off the East Coast, which is expected to linger and draw cold Canadian air to the Northeast.
"It's actually a pretty dreadful forecast if it holds up," said Zeta Rosenberg, senior vice president for ICF Consulting in Fairfax. "It doesn't just drive up demand [for fuel] and prices," she said. "The whole [energy supply] infrastructure gets strained" as harsh weather disrupts fuel deliveries and stresses pipeline operations.
The EIA forecast assumes normal winter weather -- not the harsher conditions projected by AccuWeather. It also assumes that repairs to Gulf Coast oil production and refining facilities from Hurricane Katrina will have been completed by no later than December. If the recovery schedule slips, prices will move above EIA forecasts.
Prices for home heating oil should average $2.52 a gallon over the October-to-March winter heating season in the Northeast region, according to EIA, a 31 percent increase over last winter's average of $1.93 a gallon. Prices in the mid-Atlantic region including the metropolitan Washington area will be slightly lower than in the Northeast, but consumers here will face a similar increase over last year's bills, according to EIA economist David W. Costello.
An equal jump is in store for natural gas, which the EIA expects to rise to $16.64 per one thousand cubic feet at retail, or about $1.60 per therm, the unit used on consumers' heating bills. Last winter, the average customer price in the region was $12.60.
District households and businesses heating with electricity will pay higher prices this winter compared with last because of a price increase that took effect last February. Maryland's electricity rates were raised in 2004, but those in Northern Virginia are essentially frozen at last year's levels.
Washington Gas, which supplies natural gas to nearly 1 million customers in the Washington area, has not completed its winter forecasts. Just over half of the company's gas supplies have already been purchased or are effectively locked in at prices lower than today's gas prices, promising consumers some relief.
For families on the economic margins, the main lifeline is the federal Low Income Home Energy Assistance Program, which last year paid about one-quarter of the eligible households' heating bills. The District and 20 states, including Maryland but not Virginia, supplement the federal program with state assistance, Wolfe said.
Congressional committees have tentatively earmarked $2.1 billion for the coming winter, up 20 percent from 2002. Wolfe said the program provided an average of $315 per family for about 5 million recipients a year ago. This winter, thousands of new families will need help, he said. The only option for states without heating assistance programs is to make it harder for utilities to cut off delinquent customers in the worst of winter.
"We are in trouble," Wolfe said. "The program is not designed to deal with these kinds of price increases."