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Heating, Gas Bills Worry Officials

Posted on: Wednesday, 12 October 2005, 09:00 CDT

By Greg Edwards, Richmond Times-Dispatch, Va.

Oct. 12--Warnings from government and industry about higher heating bills this winter are growing louder and more urgent daily.

A particular worry is what will happen to the poor and nearly poor as the cost of heating their homes and buying fuel for their vehicles soars beyond their means.

"We are very concerned about how families are going to cope," said Mark Wolfe, who manages a national group of state energy-assistance directors. The group is asking Congress to more than double the energy-assistance funds available to the states to $5.1 billion.

Wolfe appeared at a Washington briefing by the American Gas Association on the winter heating outlook. An official of the association, which represents local gas utilities, said it agrees with the federal Energy Information Administration that heating bills will increase significantly.

The federal agency is expected to release its winter fuels outlook today. In a preliminary report last month, it said it expected heating oil prices nationally to be about 31 percent higher than last winter and natural gas costs to be 71 percent higher.

Virginia Gov. Mark R. Warner called on state agencies yesterday to develop a plan for dealing with the expected heating cost increases. Last month Warner joined 27 other governors in urging Congress to increase funding for home heating and energy-efficiency assistance, and he is also asking utility companies to help customers prepare for dramatically higher bills.

Earlier this month, the State Corporation Commission, which regulates utilities, warned consumers to brace for higher heating bills. Virginia utilities have seen 33 percent to 64 percent increases in what they pay for gas, passing increases directly to customers.

To help keep prices down, utilities buy gas in the summer when it is cheaper and store it; use financial techniques on the commodity futures market; offer budget billing programs and encourage energy conservation, said Roger Cooper, a gas association official. Prices have risen because gas production has been flat while demand, particularly from new electric generating plants, has risen, he said.

For much of the 1990s, wholesale natural gas prices hovered around $2 per 1,000 cubic feet. Prices spiked in the months after the Sept. 11 attacks but fell back before beginning to climb in 2002. Prices in August were around $9 per 1,000, but after Hurricanes Katrina and Rita hit key gas production and processing areas in and along the Gulf of Mexico, they have since risen to a $13 to $16 range.

Representatives of the U.S. chemical industry have warned that high gas prices will send chemical plants overseas in search of lower energy costs.

Gas association official Paul Wilkinson used yesterday's briefing to make a pitch for opening up more federal lands and currently closed offshore areas for natural gas production.

"Until we increase the supply, we will be on the tightrope," he said.

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Copyright (c) 2005, Richmond Times-Dispatch, Va.

Distributed by Knight Ridder/Tribune Business News.

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Source: Richmond Times-Dispatch

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