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DOE Expects Natural Gas to Be Cheaper Than Other Home Energy Options in 2005

March 21, 2005
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Despite astronomical increases in natural gas prices in recent years, natural gas still could be the cheapest on average of all home energy sources this year, according to an analysis by the Department of Energy's Office of Energy Efficiency and Renewable Energy.

The analysis, which is based on data from the October 2004 Short Term Energy Outlook (STEO) by the Energy Information Administration, projects that natural gas will cost the average U.S. residential user about $10.92/MMBtu this year, compared to a heating equivalent of $26.55/MMBtu for electricity, $12.68 for No. 2 heating oil, $16.32 for kerosene and $16.94 for propane.

"These cost savings can add up quickly, especially for home heating and water heating," said Tom Moskitis, director of external relations for the American Gas Association, which represents 194 gas utilities across the nation. "For water heating an average household can save about $200 per year in energy costs by using a natural gas water heater instead of a similar electric unit. That means the natural gas water heater can pay for itself after just a few years -- and save a consumer nearly $1,400 in energy costs over the nine-year life of the appliance."

The savings would be even greater compared to some fuels if the latest data were used. In the March 2005 STEO for example, natural gas was projected to cost average residential users $10.67/MMBtu this year.

However, these are average prices. The actual costs customers will pay in their states will vary widely. For example, in December 2004, the average cost of natural gas to the residential user varied from a low of $5.17/Mcf in Alaska to highs of $18.61/Mcf in Florida and $29.23 in Hawaii. For more on the average end user prices of natural gas and other fuels, go to

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