Senate hearing: Sharply Higher Heating Bills Forecast

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Dec 12, 2000 - 12:03 PM

Sharply Higher Heating Bills Forecast By H. Josef Hebert Associated Press Writer

WASHINGTON (AP)- Soaring demand, low inventories and expected colder weather will keep natural gas and heating-oil prices high through the winter, government and industry economists told a Senate hearing Tuesday. The Energy Department estimated that heating bills for natural gas consumers - even with normal winter weather - will be 50 percent higher this winter than last. Some parts of the country, such as California, are likely to have even steeper increases.

"Volatile (natural) gas prices will prevail until significantly more gas supplies enter the market," Mark Mazur, head of the Energy Information Administration, told a hearing of the Senate Energy and Natural Resources Committee.

Mazur said nationwide natural gas inventories are 14 percent below the five-year average and demand is expected to be higher than during the last two winters, when the weather was unusually mild.

As a blizzard moved into the Midwest and amid forecasts of colder weather across the country, natural gas wholesale prices for January delivery soared this week to $9.41 per thousand cubic feet, nearly four times higher than what it cost last winter.

Mazur said EIA estimates that wholesale gas prices will average $5.60 per thousand cubic feet for the October-to-March period, a little over twice as high as last winter. Mazur acknowledged prices could go higher if the winter turns unusually cold.

"We are drawing down gas reserves faster than we are replacing them with new discoveries," complained Sen. Frank Murkowski, R-Alaska.

While spot prices for natural gas have soared in some cases by as much as 400 percent, industry representatives said some of those increases will not be passed on to customers - at last in the short term.

Most residential and commercial users are locked into medium- or long-term contracts that will cushion the impact at least this winter, said Roger Cooper, executive director vice president of the American Gas Association, the trade group for natural gas utilities.

Nevertheless, the EIA estimated that, on average, residential bills for natural gas users this winter would increase at least 50 percent over last year to about $834 during the heating season. That assumes, however, a normal winter, and not unusually cold weather.

The price increases are expected to hit hardest on the elderly, who are on fixed incomes, and the poor, some of whom may have to choose between heating their homes and eating, according to state energy officials.

"The country is in an energy crisis," Deborah Schachter, speaking on behalf of the National Association of State Energy Officials, told the senators.

Schachter, head of the state energy office in New Hampshire, called on Congress to expand the low-income energy assistance program and for the Clinton administration to release the $155 million remaining in the current energy assistance contingency fund.

In New Hampshire, she said, 114,000 households are eligible for low-income energy assistance, but "faced with the worst energy crisis in 20 years, we project an ability to serve less than 12 percent" of these families.

"Skyrocketing prices for natural gas, combined with rising heating-oil, kerosene and propane costs, and attendant electricity price increases for many households, leave the most vulnerable households at serious risk," Schachter testified.

http://ap.tbo.com/ap/breaking/MGAQ2ELUNGC.html

-- Martin Thompson (mthom1927@aol.com), December 12, 2000


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