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Season's Cost of Heat at New Level; Homeowners Will Pay Most Ever for Natural Gas, Oil, Propane This Winter

Posted on: Wednesday, 7 December 2005, 15:00 CST

By THOMAS CONTENT

The winter of 2005-'06 will be the costliest ever for heating homes, whether by natural gas or heating oil or propane, the Energy Information Administration said Tuesday.

Thanks to warm temperatures in October and November, the agency slightly decreased its outlook for the increase customers will face this winter. The agency now says homes heating with natural gas face an increase of 43% in the Midwest, and 38% nationwide.

Utilities in Milwaukee and Madison have warned customers to expect heating costs to rise by 40% to 50% this winter, which would translate to an increase of $300 to $375 for We Energies customers for the six-month heating season that began Nov. 1. We Energies and Wisconsin Power & Light representatives said Tuesday that they are not changing their outlook.

The agency's monthly report was issued as a cold snap of arctic air gripped Wisconsin, and as the first major snowstorm of the season socked first the Midwest and then the East Coast.

The forecast of this week's frigid weather contributed to a 20% jump in the price of natural gas on the New York Mercantile Exchange last week. The spot price of natural gas Tuesday stood at $13.49 per 1,000 cubic feet, up 95% from a year ago.

Midwest households that rely on heating oil to heat their homes can expect a 25% jump in prices this winter, while those using propane can expect a jump of 18%, the agency said.

Supplies of oil and natural gas remain hampered by Hurricanes Katrina and Rita, which caused damage to pipelines, platforms and natural gas processing plants, the agency said.

"Recent declines in petroleum product prices (especially gasoline and diesel) due to mild weather and ongoing hurricane recovery efforts have caused us to lower our petroleum price forecasts for the next few months," the agency said. "However, prices for crude oil, petroleum products and natural gas are projected to remain high through 2006 because of continuing tight international supplies and hurricane-induced supply losses."

The agency said crude oil prices will average $63 per barrel next year, up from $57 this year, and that retail regular unleaded gasoline prices will rise to $2.41 in 2006, from an average of $2.27 in 2005. The average price of natural gas is expected to rise to $9.30 per 1,000 cubic feet in 2006, a jump of 5% from this year's average of $8.88.

Copyright 2005, Journal Sentinel Inc. All rights reserved. (Note: This notice does not apply to those news items already copyrighted and received through wire services or other media.)

Source: Milwaukee Journal Sentinel

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