Manage Higher Heating, Fuel Costs

(CBS)  Oil over $60 a barrel and gas at $2.85 a gallon may seem high, but when the heating bills start rolling in later this year, these costs may seem mild when compared to the cost of heating your home this winter. Financial adviser Ray Martin offers cost-saving tips as part of his regular appearance on The Early Show.

In the past 12 months, the average retail price for a gallon of gas has risen to $2.94, up about 52 percent from $1.93, according to AAA.

If you heat your home with heating oil, expect a 65 percent jump in heating costs, up from $1.39 per gallon to $2.30 per gallon. But even this increase seems tame compared to the spike in natural gas and propane costs which are expected to be over 100 percent higher during the 2005-06 heating season versus last year.

Economists estimate that these higher costs may shave up to a point and a half off the pace of growth of the United States and world economy, which overall will still be growing. That doesn't mean much to consumers; all they know is that the high cost for gas is taking an additional $100 a month or more from their cash flow now and when an additional $300 a month is sucked out of their bank account for the higher cost of heating their home this heating season, their view of the economy, as it relates to them, will not be good.

More Are Hit Harder

These increased costs are hitting more people than ever. During the past four years there has been a surge in the number of people who have moved out of urban areas to the suburbs, a movement called exurbanization.

This movement was ignited by low fuel costs and low interest rates. The result is that there are more people driving longer commutes in SUVs to live in large houses in once rural communities.

Since 1992, the average new house size has expanded by 12 percent and the number with four or more bedrooms has surged by 37 percent, according to a recent article in BusinessWeek.

The higher heating bills will probably be the proverbial straw on the backs of many consumers this winter. What you can do now is to look over your current budget, where you spend money, and figure out what you can cut back, and how to manage the costs that you can't.

Cutting Energy Costs

Here is a list of some things to consider and you may be surprised to see how the savings can add up:

Compare costs at the gas pump and use regular grade gas. This can save up to $6 per fill up, or up to $300 per year. Also, keeping the engine tuned, your tire pressure up and your speed down, which can save an additional $250 a year.

Consider commuter options by car pooling or using public transportation, and leave the car at home. This can save on gas and tolls.

Consolidate errands into one trip or multitask on your commute by stopping to do the weeks grocery shopping on the way to home from work.

Turning the thermostat down one degree can save up to 3 percent on your heating bills. Turning it down five degrees for four hours a day can save 10 percent. In the northern part of the country, that could save $250 to $550 this winter. You can install a programmable thermostat to automatically raise and lower the temperature.

Since water heating can account for about 14 percent of your energy costs, you'll want to make some improvements in this area:

Wrapping your hot water heater with insulation can save an additional $75 to $150 a year.

Lower your water heater temperature, insulating hot water pipes and
limiting hot water use can also add to the savings.

Wash your clothes in cold water and only do full loads. This can reduce your hot water heating costs by $10 to $20 a month.

Turn your water heater thermostat down when you are away for several days or more; many new models have a thermostat with a "vacation" setting just for this purpose.

With the price of a chord of firewood over $300 (up over 50 percent from last year) fewer people may be using their fireplaces. Keeping the flue closed when not in use and using kitchen and bath exhaust fans sparingly can also help to reduce heating costs.

Weatherize and insulate your home by installing insulation in the attic and walls as needed, sealing and insulating heating ducts and sealing cracks in wall and windows. Use lower watt or energy-saving fluorescent light bulbs for additional savings.

Qualifying individuals with low incomes and the elderly are eligible for Weatherization Assistance Program benefits where, through federal and state programs, grants are provided to pay weatherization service providers to install energy efficiency measures in the homes of qualifying homeowners, free of charge.

Each state sets up its own programs and rules, but you can find out about the programs in your state by logging on to the Department of Energy Web site and search for "Weatherization Assistance Programs" or "Energy Assistance Programs" for a list of states that administer these programs.

• 1
• 2
• Next Page »