Heating Bills To Be Budget Burden

Energy Department Estimates Big Increases For Gas, Oil Users

(AP)  Winter heating bills will be a third to a half higher for most families across the country, with the sharpest increases expected for those who heat with natural gas, the Energy Department forecast Wednesday.

The department said natural gas users can expect to pay an average of $350 more during the upcoming winter compared to last year, an increase of 48 percent. Those who heat their homes with fuel oil will pay $378 more, or 32 percent higher than last winter.

Propane users can expect a percentage jump in their bills similar to those of fuel oil users.

In its winter fuels outlooks report, DOE's Energy Information Administration assumed a normal winter and steady progress in restoring oil and natural gas production and refinery output from the damage inflicted by hurricanes Katrina and Rita.

"Should colder weather prevail, expenditures will be significantly higher," the EIA said.

The agency as well as the natural gas industry said that heating costs could vary widely among regions.

A month ago, the EIA said natural gas prices could jump as much as 71 percent in the Midwest, where four of every five homes are heated by gas. The cost of fuel accounts for about 70 percent of the price utilities charge retail residential customers, according to the American Gas Association. It made no such specific assessment this time, but acknowledged that a colder-than-normal winter in the Midwest would produce significantly higher costs.

However, the National Weather Service predicts a warmer than normal winter for much of the Midwest and West. But NOAA Administrator Conrad C. Lautenbacher, Jr. warns, "Even though the average temperature over the three-month winter season is forecast to be above normal in much of the country, there will still be bouts of winter weather with cold temperatures and frozen precipitation."

EIA said it expects continued recovery of the energy system in the Gulf region in the coming months. But it said it expects a third of the Gulf's crude oil and a fifth of its natural gas to remain shut-in into December.

It also projected wholesale natural gas prices staying at about $12 per thousand cubic feet through the winter heavy demand period, twice what it cost last winter.

For some low-income families the sharp jumps could mean choosing whether to eat or keep warm, energy experts and advocacy groups fear.

The natural gas utilities warned Tuesday that despite their attempts to contain retail fuel costs, heating bills for gas users this winter will jump 50 percent over last season nationwide. In parts of the Midwest bills could be much higher.

More than half of all U.S. households heat with natural gas. But many of those who rely on electric heat, nearly a third of the country, may also see bills go up because many power plants run on natural gas. And users of fuel oil, more than half the households in New England, are expected to see their costs jump by a third or more over last winter, according to industry and government estimates.

"We have never had prices so high and increase so quickly," said Mark Wolfe, executive director of the National Energy Assistance Directors Association, which represents the state agencies that distribute money to help low-income families pay their fuel bills.