U.S. government warns consumers of higher heating costs

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Higher Heating Costs

U.S. Says Winter Natural Gas Price May Spike

By Patrick Connole

WASHINGTON, Dec. 7 -- The U.S. government on Wednesday warned consumers of soaring natural gas prices this winter amid forecasts for cold weather and tight supplies, which have already forced California utilities to seek curbs on Christmas lights.

The typical American household will pay a record $834 to heat its home with natural gas this winter, up 62 percent from last year.

Consumers who use heating oil will also pay a record $1,044 for fuel to warm their homes this winter, up 38 percent from one year ago, the Energy Information Administration said.

Not Enough Supplies

The EIA, a statistical agency within the Energy Department, said spot natural gas prices were at record highs based mainly on apprehension about tight supplies for this winter season.

“The low gas inventory situation, combined with fickle weather, has put the market in a very jittery position,” the EIA said. “Cold weather for prolonged periods this winter would strain supplies and could result in even higher spot prices.”

California has been experiencing sharper price rises than the rest of the country, exacerbating an already tight electricity supply situation.

Chaos on the state's power grid was so precarious Tuesday evening that Gov. Gray Davis, at the annual Christmas tree lighting in Sacramento, switched the tree's lights off after just a few minutes to save energy.

The start of Wednesday was no better when California power industry officials issued a Stage Two power emergency, cutting supplies to industrial customers due to a severe shortage of available electricity.

It was the third consecutive power emergency in as many days, as the state's power plants -- many shut for repairs -- and power imports from other states barely kept up with demand.

Stocks Down, Prices Up

The government's warning of record consumer bills for natural gas this winter plus worries about a cold snap sent U.S. wholesale prices rocketing to new highs.

Natural gas futures on the New York Mercantile Exchange closed up $1.101 at $8.485 per million British thermal units. Earlier in the day, prices hit a record high of $8.80 per Btu.

The EIA projected U.S. natural gas supplies in storage would decline to 0.64 trillion cubic feet (tcf) at the end of first quarter 2001, about half as much supply when compared to same period of 2000.

“Spot gas prices at the [producer] wellhead have never been this high for such a sustained period of time,” EIA said. “Cold weather for prolonged periods this winter would strain supplies and could result in even higher spot prices.”

Tight supplies, however, have made it profitable for companies to step up drilling for natural gas, the government said. Based on recent U.S. drilling activity, there should be about 15,000 gas wells completed in 2000 and 2001, the highest level since 1985.

California Facing Dire Condition

California came dangerously close late Tuesday to the most severe alert -- a so-called Stage Three emergency which would trigger rotating blackouts of entire neighborhoods to prevent the collapse of the entire grid. A statewide Stage Three emergency has never been declared.

The government noted the dire straits in California, saying high demand for natural gas-fired electricity, relatively cold weather and demand surges have sparked the latest round of emergencies.

Energy Secretary Bill Richardson earlier this week ordered federal facilities in California to cut back on power and diverted power from the Glen Canyon dam in Arizona.

Richardson has warned in the past that a lack of coordinated congressional action on revamping the nation's power sector, along with market conditions in the West and other regions, could lead to power shortage alerts.

Copyright 2000 Reuters. All rights reserved.



-- (in@energy.news), December 07, 2000

Answers

Financial Times: "US faces crisis over energy policy"

http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=004BvV

-- (also@see.this), December 07, 2000.


They 'ought' to be warning bout the damn lectric bills...mine was 102.00 for the 'budget' and I have a barbie/ken house, no bigger than a damn minute.

*sigh* and pays the bill.

-- sumer (shh@aol.con), December 08, 2000.


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