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11.7.04 Gas prices heating up Winter has yet to arrive, but already natural gas prices have hit record highs for this time of year, raising concerns about the size of heating bills. Nationally, natural gas prices at the well head are 65 percent to 80 percent higher than a year ago. Eastern Nebraska homeowners will pay 26 percent to 56 percent more than a year ago for November's natural gas, while the many western Nebraska customers on Kinder-Morgan Inc.'s fixed-rate plan are paying slightly higher rates. Gas prices could drop -- they have tailed off 11 percent in the past week -- but the futures market indicates continued unusually high prices. If current prices hold through the winter, the average Metropolitan Utilities District customer would face a heating bill of about $200 in January -- and that's assuming January doesn't turn unusually cold or prices don't rise further. For now, M.U.D. projections indicate a possible 36 percent increase in bills over the course of the winter. A warm winter -- as happened last year -- would soften the impact if prices remain high, said Scott Keep, senior vice president for M.U.D. The prudent thing for customers to do, he said, is to prepare for higher bills. Customers of Kinder-Morgan's fixed-rate plan may come out ahead this winter. Kinder-Morgan each spring gives customers a choice of pricing plans. Most choose a plan that locks in the price of gas. If the cost of gas subsequently drops, the customer ends up overpaying. If prices rise, as they appear to be doing this winter, the customer gets the benefit of underpaying. Les Meyers, director of business relations at Kinder-Morgan, said his gut tells him that prices will be up substantially in January. "I don't have a crystal ball," he said, but "it's got to be a good feeling to our customers that they're not going to see those prices when they hit." Nationally, natural gas prices are high, Keep said, because demand is growing while supplies are tight. And oil has been trading at record highs, with natural gas prices tracking oil. M.U.D., Aquila and other local utilities do not pocket money from the high prices. Instead they pass along what they are charged to buy the gas. Supplies are tight because the economy is growing, which means industry is consuming more gas. Furthermore, more electric utilities are burning gas for fuel, in part to avoid the pollution associated with coal. And, finally, as petroleum prices rise, industry turns to natural gas for fuel as a way of saving money. Global instability, Keep said, also has contributed to the overall increase in energy prices. At the same time that demand is increasing, the growth in natural gas production has slowed. Gas fields are maturing, so even though more wells are being drilled, there hasn't been a corresponding increase in output. Also, daily production in the Gulf of Mexico remains down about 6 percent due to hurricane damage to wells. Still, this month's increase in prices is unusual, said Jan Davis, spokeswoman for Aquila. Nationally, the gas industry has a record amount of gas in storage for this time of year. That usually calms prices. Furthermore, temperatures haven't been particularly cold, so weather doesn't explain the increase in prices. The best thing for homeowners to do now, experts say, is to weatherize their homes, sign up for their gas utility's level-payment plan and keep the thermostat down. Those who provide energy assistance to low-income people have been girding for a busy winter. The phones already are ringing at Weatherization Trust Inc., a federally-funded agency that provides weatherization assistance to the low income in Omaha. "Everybody is hearing what's going on out there," said Richard Haire, president. "If it's a cold winter, we're going to see some horrendous bills." Haire said weatherization can shave 17 percent to 33 percent off heating bills. His office has a six-to-10-month waiting list for first-time assistance. Based on federal projections, his homeowners will benefit -- even if the work isn't done until next summer. The Department of Energy projects that natural gas prices for the winter of 2005-2006 will be higher than this winter. Ease those costs Cut your heating bill by as much as a third:
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