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Archive for Friday, August 25, 2000

Winter heating bills will be nothing to sneeze at

August 25, 2000

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— Already walloped by a rise in gasoline prices this year, Americans are now about to face steeper home heating bills, with natural gas and heating oil near historic highs.

Energy markets were jolted this week by a combination of developments that sent prices shooting higher an unexpected drop in U.S. crude oil stockpiles, a pipeline explosion in New Mexico and a hurricane in the Caribbean.

Soon the aftershocks will be felt by consumers nationwide.

Regardless of whether a homeowner uses natural gas or heating oil, there appears to be no way around prices heading higher than they were last winter one of the costliest home heating seasons ever.

This week, the Kansas Corporation Commission announced an increase in natural gas rates for UtiliCorp United, which provides service for 30,000 customers in the Lawrence area. Residential rates will increase 8.7 percent and small commercial rates will jump 9.5 percent, effective Sept. 1.

And that doesn't include incremental increases brought upon by the rising wholesale prices UtiliCorp must pay.

"It's a difficult challenge," said Rosemary Foreman, a KCC spokesperson.

Suzanne deGraff, a natural gas customer from Rochester, N.Y., said she has been told her monthly bill from Rochester Gas and Electric Co. will jump about $26 to $130.

"I'm not happy," she said, "but, again, they're the only ones in town. What am I going to do?"

If more disruptions or heavy demand drain dwindling stockpiles further, rationing and industrial shutdowns are "a pretty good possibility" this winter, especially involving natural gas, said analyst Michael Lynch of WEFA, an economic think tank in Bedford, Mass.

Edward Kelly of Cambridge Energy Research Associates in Houston stopped short of predicting such an energy crisis. But he said the market is the most vulnerable it has been since energy deregulation two decades ago.

"It's the worst situation since at least the early 1980s," he said.

Experts said consumers could skate by this winter only if last year's warmest winter on record is followed by one just as warm or warmer.

But according to at least some meteorologists, the pattern of historically warm winters is at an end.

"If we have a winter that's just normal, we're going to see potentially astronomical natural gas prices much higher than we see today," said David Chang, senior energy trader for Bank of America in New York.

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