|
Sunday,
October 28, 2007
By Gary
B Gray
Supply and demand is part of a cold economic
equation most folks don’t care to ponder when staring in amazement at their
heating bills.
But the bottom line is winter is on its way and so
are higher heating costs – again. The basic reason is increasing global demand
for crude oil.
Fluctuating overseas prices, weather-related
disasters, regional operating costs, the war in Iraq and a marketplace made timid
by strained foreign relations are the main causes for increased prices.
That’s the "why" in a nutshell. Now for
the "how much."
Crude oil prices skyrocketed to an all-time high
of $92.09 per barrel at noon Friday.
That’s more than $2 above the previous record set
Thursday at the close of trading on the New York Mercantile Exchange, said
Martha Mitchell Meade, a spokeswoman for AAA Mid-Atlantic. The NYMEX is the
world’s largest commodity futures exchange and the pre-eminent trading forum
for energy and precious metals.
This means consumers should brace themselves, not
only for the upcoming cold weather, but for higher gas and heating oil prices
in the coming days and months, Meade said.
"We try not to predict long term, because
there could be a geo-political change [political relations] or changes in the
weather," she said. "But in the short term, I don’t think you’re
going to see any substantial drop in prices."
That’s probably a good bet, considering the
per-barrel price at the same time in 2004 was about $37.
An average increase expected among the four major
energy sources during the heating season – October through March – is 13
percent. So as an example, if a family paid $150 monthly to heat their home
during last year’s heating season, they will see those bills jump to $169.50
per month.
Of course, specific bill increases will depend on
the type of heating source.
The only good news appears to be that
above-average temperatures are expected in November, and that might give
consumers a slight break on their bills.
The drought-plagued Southeast is likely to remain
drier than average, and temperatures are expected to be above normal through
November, according to the National Oceanic and Atmospheric Administration.
NOAA forecasters call for above-average
temperatures for most of the nation over the next month and a continuation of
drier-than-average conditions in the agency’s national winter outlook, released
Oct. 9 at the 2007-08 Winter Fuels Outlook Conference in Washington, D.C.
But the price of crude oil remains high, and that
means households primarily using heating oil will likely cost the most to heat
this winter – an average increase for the six-month season of $319, up 22
percent, according to the U.S. Energy Information Administration.
The residential home heating oil record price was
broken Oct. 15, when it hit an all-time high of $2.79 per gallon.
"Those who heat their homes with oil this
winter are advised to prepare for prices which are even higher than the current
record levels," Meade said.
Households heated primarily with propane will take
the next biggest hit with an expected average increase of $221 –16 percent –
this winter.
The nationwide average for households heating
primarily with natural gas are expected to spend an average of $78 more this
winter.
Joel Aimes, a spokesman for Atmos Energy’s
Kentucky/Mid-State Division, said customers in this region can expect nearly a
10 percent increase this winter over what they paid for natural gas last
winter.
That jump is because of a 6 percent increase in
wholesale price and a 3 percent increase in consumption.
Atmos has about 8,000 gas customers in the Twin City,
Aimes said.
Finally, households heating primarily with
electricity can expect to pay an average of $32 [4 percent] more during the
heating season, according to the EIA.
While electric heating is cheaper than natural
gas, propane or heating oil, the method also will cost consumers more this
winter.
And once more, the 4 percent jump is because of
increased consumption and prices. Most of the increase is a result of higher
fuel costs in coal-fired electricity production.
Bristol Tennessee Essential Services provides
electric heating to 28,000 residential customers. About half are in the city,
and the other half are spread throughout Sullivan County.
"The crude oil prices do not impact electric
service as much as they do natural gas and heating oils, but even electric
service may be a little higher in the coldest months," said Michael
Browder, BTES executive director.
BTES gets its electricity from the Tennessee
Valley Authority, and about 60 percent of that electricity is generated from
coal-fired steam plants.
"But what has happened to crude oil prices
does affect us slightly, because some of the byproducts are used in generators
by TVA to help produce the energy," Browder said.
Bristol Virginia Utilities provides service to about
10,000 residential customers. Residential customers using electric heating
should expect to see their bills rise from December through March, said Wes
Rosenbalm, BVU president and chief executive officer.
"Those are typically our coldest months, though
what we call the ‘heating season’ usually runs from November through
April," he said. "And crude oil prices will not affect our rates this
winter, because we have a fixed contract with American Electric Power."
BVU raised its electric rates by almost 10 percent
in July. The rates are expected to rise again in June. At that time, BVU will
have switched over to TVA for its power.
"We expect another rate increase of more than
9 percent in June, but that may vary depending on whether TVA raises its
costs," Rosenbalm said.
He said the one variable that cannot be changed is
the temperature outside.
"Customers ask me why it costs more in the
winter," he said. "I explain to them that in the winter there’s
usually a 30-degree difference in what the temperature is outside and what
temperature is desired inside."
http://www.wcmh.com/tristate/tri/news.apx.-content-articles-TRI-2007-10-28-0015.html
|
