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Consumers Face Sharply Higher Heating Costs

Natural Gas Prices Could Double, Feds Warn

October 12, 2005
Now that gasoline prices appear to be easing a bit after a dual-hurricane induced supply disruption, get ready for higher winter heating costs. The U.S. Department of Energy predicts consumers face 30 to 50 percent hikes in heating costs over last year, with those heating with natural gas getting hit especially hard.

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The DOE estimate said consumers heating with gas will likely pay an average of $350 more this winter than last, up about 48 percent. The cost of heating with fuel oil could be as much as $378 more this winter, according to the report.

Of course, that assumes a normal winter – and normal is not a word that describes our weather lately. DOE also said its projections are based on steady progress in restoring energy production and refinery output in the Gulf region, damaged by Hurricanes Katrina and Rita.

“As of October 6, there are 20 natural gas processing plants in Texas, Louisiana, and Mississippi each with capacities equal to or greater than 100 million cubic feet per day, which are not active. A number of the inactive plants are expected to be operating within 4 weeks,” the DOE report states.

Winter heating costs may vary widely in different regions of the country. For example, 80 percent of homes in the Midwest are heated with natural gas, so that area could face the greatest increase in costs. DOE said it projects the wholesale price of natural gas to remain around $12 per thousand cubic feet during the most severe part of the winter.

The American Gas Association said it foresees no threat of a fuel shortage this season, despite the fact that Gulf coast natural gas production is down about 60 percent from normal levels.

Wholesale natural gas prices have nearly tripled since 2001, with producers attributing the increase to tighter supplies, caused by rising world-wide demand. They say the demand has not lessened, and that the loss of U.S. Gulf production has made a difficult situation worse.

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