EIA Sees 40% Hike in Gas Bills
Natural gas bills for residential households this winter could
be as much as 40% higher than the last winter heating season, with
the Midwest likely to feel the pinch the most, according to a
market overview presented by the Energy Information Administration
The 40% hike in household bills is a distinct possibility if
residential gas prices rise 25% or more this winter, as is
expected, and winter weather conditions are normal, the Department
of Energy (DOE) agency said in its "Winter Fuels Market Assessment
2000" to the Northeast-Midwest Congressional Coalition. However, if
the winter is colder, then the increase in residential bills will
be far greater, it noted.
The probability that the winter heating season of 2000-2001 will
be "at least somewhat colder" than last winter is 95%, that it will
be "10% (or more) colder" than last winter is above 50%, or that it
will be "20% (or more) colder" than last winter is about 10%,
according to the EIA.
With normal temperatures, there would be "broad increases" in
heating demand across the North Central and Northeast regions, the
agency noted, but the greatest potential for heating demand growth
will be in the Midwest. Since the Midwest typically favors natural
gas as a home heating fuel, this would mean that demand for gas and
propane would likely "exhibit higher year-over-year growth rates
than heating oil" this winter, the EIA said.
In the Midwest, the EIA forecasts that residential customers
could see average burner-tip prices as high as $8.40/Mcf this
winter, up from $6.61/Mcf a year ago. This would mean that the
average winter gas bill for a Midwest household would total $734
this year, compared to $511 for last winter, the DOE agency noted.
Even though gas inventories are below their historical levels,
the EIA seems to think there will be enough gas in storage to meet
demand this winter. "We are currently projecting that working gas
will be between 2,800 and 2,900 Bcf at the end of October, entering
the heating season somewhat below average," it said. But if you
allow for at least 800 Bcf to be in storage at the end of the
heating season in March 2001, "this suggests an operational ability
to withdraw 2,000 Bcf or more during the [upcoming] heating season,
which exceeds the 1,876 Bcf withdrawn last winter."
As for the heating oil market, the EIA projects that Northeast
residential customers will be paying higher prices this winter.
"Even without particularly sharp cold weather events this winter,
we think consumers are likely to see higher average heating oil
prices than were seen last winter," the agency said.
It forecasts that heating oil in the Northeast will be
$1.32/gal., up from $1.19/gal. last winter, assuming normal
weather. Overall, the EIA estimates that the average Northeast
household will pay $901 for heating oil supplies this winter,
compared to $765 a year ago.