The Department of Energy released a forecast likely to send chills down the spines of consumers--predicting that the cost of staying warm at home this winter could be as much as 44 percent higher than last year.
Home heating customers face a double whammy. Not only are oil and natural gas prices on the rise, but also winter temperatures are more likely to return to normal after two mild winters that insulated consumers from higher heating bills.
The Energy Information Administration said yesterday that consumers can expect to pay 19 percent to 44 percent more to heat their homes this winter, in large part because of the increase in the price of crude oil.
Crude prices have more than doubled, from an average of $9.39 a barrel in December 1998 to $23 a barrel this month, according to the EIA. And the high price of crude oil is helping to increase prices for natural gas as well, said David Costello, an economist in charge of the EIA's short-term energy outlook.
Most homeowners don't use oil to heat their homes--in the Washington area, for instance, heating oil accounts for only about 9 percent of the market while natural gas accounts for approximately 61 percent of home heating. The balance is electric heat.
The EIA's Costello said that electric utilities, which switch from natural gas to oil when oil prices are low, are returning to natural gas and thus creating more demand for the commodity. He also noted that extreme heat in parts of the nation also increased demand for natural gas for power generation during the summer to keep air conditioners running.
As a result, natural gas prices at the wellhead already are about 30 percent higher than last year--in part because last year's prices were low, said Costello. Over the entire heating season they are expected to average about 40 percent more than last winter's, he said. If winter temperatures only return to normal during this heating season--as opposed to colder than normal--households will probably keep their heat on 7 percent to 9 percent more than they did last year, Costello said.
Debbi Bortel, director of regulatory strategy for Washington Gas Light Co., said it's too soon to be able to say what prices Washington area consumers will pay for natural gas. But she said it's likely to be more than last year, when prices averaged from 31.73 cents per therm (a unit of heat equal to 100,000 British units) in Virginia to 33.64 cents per therm in the District.
After lower prices last year, she said, "we're seeing prices revert back to what they typically are this time of year."