Most households and businesses will pay more for heating this winter as the prices of crude oil and other energy sources continue to rise, according to a U.S. government forecast released yesterday.
The Energy Information Administration, an arm of the Energy Department, said the average costs of heating oil, natural gas, propane and electricity are expected to rise across the country from October through March.
The most significant cost increase for households is expected in heating oil, which is predicted to rise 28 percent in the Northeast. The cost of natural gas is expected to increase by 15 percent in the Midwest. The report predicts the household cost of fuels in the regions where they are most commonly used.
In the Washington area, where the majority of residents rely on natural gas, local providers believe the increases will not be as steep as in the Midwest. Washington Gas, which serves about 1 million customers, is forecasting an increase of about 2 percent between November and April. Baltimore Gas and Electric Co., which serves about 600,000 natural gas customers, forecasts a 10 percent increase between November and March.
Analysts said they expected the price of heating oil in the Washington area, where it is used by less than 10 percent of area residents, to mirror the increase in the Northeast. Heating oil is distributed by numerous providers.
"This winter, tight global oil markets and elevated world and domestic oil prices are expected to raise heating oil prices and expenditures substantially," the forecast said.
The forecast does not provide average prices for electricity, which is commonly used in the Washington area to heat homes.
The forecast said higher prices were predicted as a result of volatility in crude oil prices, limited supplies of natural gas and projections for a slightly colder than normal winter.
Guy F. Caruso, head of the Energy Information Administration, cautioned that the forecast could change in either direction if temperatures are higher or lower than forecast.
On the New York Mercantile Exchange yesterday, U.S. benchmark crude closed at $52.02 per barrel, up 93 cents from Tuesday. Prices have risen significantly in the past year as increasing demand has pushed production close to its limit. Traders have been concerned in recent days about continuing disruption to production in the Gulf of Mexico as a result of Hurricane Ivan last month.
Home heating oil customers said they were not pleased to learn of the likely increases.
"That's horrible," said Reda Harden, 34, a secretary who lives in Northwest Washington and has not yet purchased oil for the winter. "It's already too high for me."
Last winter, Harden said she received assistance in obtaining heating oil from the Salvation Army and had to stay with her sister during a time when she could not afford to refill the tank. Harden lives in a rental house that she said is not properly winterized, contributing to high bills.
Edward Whitman, general manager of Whitman's Oil Co. in Northern Virginia, said customers are discovering prices 40 to 50 percent higher this year than last. He said many held off buying during the summer, thinking prices would decline.
"Now people are suddenly encountering the realization that it did not go down and it might not go down," Whitman said.
To compensate, Whitman said, he cut his profit margin by 50 percent this winter compared with last. He said more customers have asked to be placed on payment plans.
The cost of winter heating became an issue in the presidential campaign yesterday. The campaign of Democratic nominee Sen. John F. Kerry released a statement saying that the government forecast was "just another example of how middle-class families are having a harder time making ends meet under this president" and that President Bush has "failed to advance a viable plan for dealing with the energy crisis."
White House spokesman Trent Duffy said that an energy bill, which is stalled in Congress, would address rising prices but that Kerry and his running mate, Sen. John Edwards (N.C.), have helped block the measure. "Had the energy bill passed, we would be in a far better position to deal with the situation we're seeing," Duffy said.
To compensate for the expected increase in heating costs, the National Energy Assistance Directors' Association, whose members oversee assistance programs, called on Congress to provide more funding for low-income families. Without more money, the programs would be stretched thin and might have to reduce benefits or increase the threshold at which families qualify, said Mark Wolfe, executive director of the association.
He said the increase, combined with rising gasoline prices, will be difficult for families in need. "That's significant," Wolfe said. "That's money they can't spend at Wal-Mart."