Increase forecast in heating costs

Consumers should brace themselves for higher fuel prices this winter that could add as much as 42 percent more to home heating bills.

Solid growth in world oil demand this winter likely will tighten world oil markets and reduce commercial oil inventories, according to forecasts by the U.S. Department of Energy.

And while natural gas in storage remains ample, an expected recovery in the nation’s power and industrial sectors could drive up demand.

Natural gas bills for Midwestern families are expected to increase to $700 this year, up 17.5 percent from $596, according to Energy Department statistics.

Demand for fuel is expected to rise with predicted colder temperatures this winter compared with last year. And speculation about a war with Iraq could drive prices higher.

“It’s pure speculation what could happen,” said John C. Felmy, director of Policy Analysis and Statistics at the American Petroleum Institute, an industry trade group. “I can’t speak to what, or if there’s even a ‘war premium’ out there. The markets are nervous.

“But consumers should look at the forecasts, look at the futures market, talk to their gas utility or propane or heating oil supplier, and see what options are available to them,” Felmy said. “Then they have to figure in the risks that they are willing to bear.”

Even as demand rises, the Organization of the Petroleum Exporting Countries announced Thursday that it would keep production of crude steady for the time being. It also blamed prices that reached about $30 a barrel on worries that the United States will attack Iraq.

Crude oil for October delivery rose Friday 11 cents to $29.61 a barrel on the New York Mercantile Exchange.

The natural gas market frequently follows the oil market, said Bill Transier, chairman of the Natural Gas Supply Assn.

“If we go to war with Iraq, and if oil prices go up in response, we believe there will be upward pressure on the natural gas market,” Transier said.

While there is an ample supply of natural gas, production is down about 1.7 percent, which could affect prices, according to the Energy Department.