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Natural Gas Prices Are Expected to Drive Home Heating Bills Through the Roof

Posted on: Saturday, 27 August 2005, 00:00 CDT

Aug. 27--Feeling tapped out from filling up your SUV with $2.59 a gallon gasoline? You might not want to hear Al Walker's predictions for how much your home heating bill could rise this winter.

Walker is a spokesman for Kansas Gas Service, Overland Park, a division of Tulsa, Okla.-based Oneok, which provides natural gas service to Salina.

Natural gas prices traditionally drop in summer months due to lower demand. But electrical power generators have turned to new natural gas-fueled power plants. The result, Walker said Friday, has been a steady rise in wholesale natural gas prices as demand for electricity has risen in the hot summer months.

That wholesale price, which in January 2004 totaled $6.52 a 1,000 cubic foot, increased a year later to $7.29, Walker said. Going into the third quarter of this year, the price could hit a record $12 to $13 a cubic foot.

Consumers who burn natural gas in their homes and apartments -- the majority of Kansas Gas Service's 642,000 customers -- could see their monthly bills increase by as much as $15 to $20, Walker said.

The situation is being compounded by slow growth in natural gas production and an active hurricane season that's affecting off-shore natural gas production in the Gulf of Mexico, further restricting supply.

"It's still basically a supply-and-demand issue," Walker said.

"(Home) energy conservation is going to be a key in minimizing the impact of natural gas prices." Residential customers consume about 30 percent of all natural gas the company distributes, he said.

Kansas Gas Service customers might not suffer the highest of the price hikes. Walker said the company's purchasing strategy has been to lock in contracts in the summer months when the price is lower.

Still, he said, Wednesday's spot market price was $9.98.

"Hopefully, our customers will not have to pay the $13 I just mentioned," Walker said.

On a larger scale, Greg Holeman, a vice president at cabinet maker Crestwood Inc., 601 E. Water Well, said he's seen the company's natural gas costs almost triple in about a six-year period, to about $18,000 annually.

To help cope with that rising cost, the company in 2002 installed, at a cost of about $1 million, an innovative wood combustor system. It essentially is a huge, wood-fired hot water tank heated by burning sawdust.

In the cabinet maker's finish department, exhaust fans suck out chemical fumes from spray booths, while other air-handling units pipe in fresh air from the outside. In the winter that air is heated by a hot water coil heated by the wood combustor.

"If the hot water can't keep up, the natural gas will kick on," Holeman said. Since it's been operating, he estimates the system has saved Crestwood about $10,000 a year. "As the price of gas goes up, it saves you more and more."

The rising price of natural gas has been spurring some homeowners to consider equipping their homes with wood-burning stoves and fireplaces, and replacing old furnaces with new energy-efficient ones.

"People are coming in, gathering knowledge and seeing if certain products fit, and what products we have," said Jim Kerby, who with his brother-in-law Steve Miles own Milestone Hearth Shoppe and Chimney Service, 245 S. Fifth. He said other customers lately have included those who haven't used their fireplaces or stoves for several years, but are planning to start again.

"We do a lot of (chimney) inspections," Kerby said. "Our busy season starts in mid-August and lasts until about the middle of May."

Tom Pestinger, owner of Pestinger Heating & Air Conditioning, 125 E. Avenue A, said homeowners with a furnace older than 25 years, running at 50 percent to 55 percent efficiency, can save more than $1,000 a year on their bill by switching to a new furnace running at 92 percent efficiency. The cost of such a furnace generally is going to be at least $3,000.

"Probably 85 percent of systems we change out today are running fine, there's nothing wrong," Pestinger said. "But if you're saving $1,000 a year, and it's paying for itself in three years, then it's money in the bank."

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Copyright (c) 2005, The Salina Journal, Kan.

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OKE,

Source: The Salina Journal

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