Bracing For A Cold, Costly Reality

OPEC, Economy, Consumers Blamed For Energy Crunch

(CBS)  As summer fades into fall and temperatures cool, U.S. energy prices may be getting ready to heat up again, reports CBS News Correspondent Cynthia Bowers.

Across the country, there are signs that the cost of heating a home this winter will dwarf the soaring gas prices that frustrated American drivers at the start of summer.

"I think it's going to be quite a surprise," warned oil industry analyst Kate Warne. "When those first bills hit in November and December, we're going to see a lot of people very unhappy about how much they're paying to heat their homes."

Heating oil prices in the Northeast are expected to rise by at least 20 percent. In the Midwest, where heating oil is not widely used, gas prices are expected to be the biggest problem. And in California, the electricity supply shortage of this summer will likely persist.

Experts say this energy crunch is related to the high gas prices at the start of the season. Oil companies, lured by high gasoline prices, continued to refine gasoline instead of starting to stockpile heating oil.

That's one reason why home heating oil inventories are down 40- to 50 percent below even last year's low levels. The average cost to fill a typical heating oil tank was about $270 this time last year. Now it costs upward of $360.

Save Big Bucks On Energy

Here's what you can do to cut costs:

1. Keep your car tuned up, to improve fuel efficiency, and avoid buying gas-guzzling vehicles such as SUVs.

2. Use low-wattage lighting, such as compact florescent lights, when possible.

3. Try the low-power air conditioner setting.

4. Run the washing machine, the dishwasher and other high energy-use appliances late at night, when electricity prices drop.

5. If electricity has been deregulated in your area, shop to get the best deal.

6. Many utility companies offer free home inspections, to suggest energy savers.

7. Check out the Web sites of the Energy Department and the
Consumer Energy Council of America.

The price of natural gas is also up, having doubled in the last two years.

People's Gas, a leading supplier of natural gas in the Chicago area, says it expects the cost to heat a typical house will rise by about $50 this mnth, or 45 percent.

To complicate matters, natural gas markets were rocked by last Saturday's deadly pipeline explosion in New Mexico. The blast itself threatened to disrupt supplies and the warning by the National Transportation Safety Board—that the nation's pipeline system is aging and rarely gets inspected—suggested there could be other ruptures in the future.

In California, electricity is the big issue. As the economy and the population there boom, demand for power is rising at the same time the market is undergoing deregulation.

Across the country, the combination of cold weather and high prices could hurt millions of people on fixed incomes.

"Where I'd been putting down $10 to save for gas this winter, I had to increase and I'm still working on that now," said Chicago's Peggy Bentley.

President Clinton is discussing oil prices with Nigeria's president, as part of his trip to that key OPEC nation this weekend. Mr. Clinton argues that OPEC, which next meets on Sept. 10, should bring the price of a barrel of oil to the low- to mid-$20s—down from the current $32, but higher than 1999 lows of $13 to $15.

In an interview with CBS News, Severin Borenstein of the California Energy Institute said America's consumers and the booming economy are partly to blame for the high prices.

"The economy roaring along caused unexpected increases in demand," notes Borenstein, "causing prices to skyrocket. People are buying SUVs, and they're paying less attention to insulating their houses and saving on electricity...buying more of the stuff and conserving less of it."

Jamie Wimberly of the Consumer Energy Council of America said steps can be taken here to fix America's power problems.

"Things need to change," he said. "Electric and natural gas companies are going to figure out how to get more power plants up, string more wire and pipelines. Regulators will figure out what's working and what's not, and consumers are going to be smarter shoppers."

The silver lining of the fuel frenzy, Borenstein points out, is that today's high fuel prices could give energy companies the money and incentive to develop new energy sources.