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9.17.03 Some Americans could see 8% higher gas bills Some Americans could see 8% higher gas bills Most U.S. homeowners will pay more to heat their homes this winter than last year as tight natural gas supplies prop up prices for the second consecutive year, the Energy Department predicts. Americans who use natural gas, about 55% of homeowners, will see their bills rise more than 8% on average, according to initial data the department plans to release next month. That would bring the average Midwesterner's winter heating bill to $864 this year, up from $797 last winter. On a positive note, homeowners who use heating oil will likely see their bills fall nearly 9% to $921. Last year, demand for heating oil, used to heat 8% of U.S. homes, skyrocketed as an especially cold winter hit the Northeast, where heating oil is mostly used. The higher demand led to sharp price gains. Although the average price per gallon for heating oil is not expected to change much, the estimate assumes more normal temperatures and less demand. Those who use electricity for heating, about one-third of U.S. homes, and others who use propane will see little change from last year, the Energy Information Administration, the statistical arm of the Energy Department, predicts. All of these figures assume a "normal" winter. "A cold winter in an already tight market would push up prices a lot," EIA economist Dave Costello says. That's especially true for natural gas. Natural gas is considered a relatively environmentally friendly energy source that is also used to create electricity and industrial products. Demand has risen steadily while production gains have leveled off. A cold winter could boost demand and prices. Increases in energy costs not only squeeze budgets for U.S. families, they're also bad news for the economy as a whole. "More money spent on heating your home is money not spent on other things," says Jay Mueller, economist at Strong Capital Management in Menomonee Falls, WI. Household spending is especially important as the economy appears to be picking up speed, but cautious CEOs are keeping a tight grip on spending and hiring. That adds to pressure on consumers. Roger Colton, a partner who specializes in energy issues for low-income families at economic consulting firm Fisher Sheehan and Colton, suggests homeowners prepare for the winter now by plugging any cracks in windows and doors to prevent heat from escaping. He also suggests consumers contact their utilities to set up billing plans that spread payments throughout the entire year. Jim Rajca, a grinder operator in Buffalo, says he and his wife, Melaine, tried to use the fireplace as much as possible last year and turned down the thermostat at night to try to save. Still, he didn't finish paying off his natural gas heating bills under his utility's payment plan for last winter until last month "You more or less have to plan for it," Rajca, 56, says. |
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