Your Natural Gas Bills are Increasing this Winter
Boy, I hate being the bearer of bad news, especially after yesterday's Comcast rate increase post, but I have to tell you that the American Gas Association said yesterday that consumers should expect a likely 10 to 30 percent increase in home-heating costs this winter.
Gas is the most common form of home-heat in the U.S. so this will likely hurt a lot of households, especially those in the Northeast and upper Midwest where the winter can be especially cold.
So how exactly will this affect you? It's hard to say since the increase will depend on two factors: how much gas you use to heat your home this winter and the price per unit that your utility paid to lock in its supply for the cold season.
As the AGA explains it, "During much of the first half of 2008, natural gas prices on average were much higher than they are now. Spot prices at the popular Henry Hub in Erath, Louisiana ranged between $7.18 and $13.01 per million Btu (MMBtu) from January through July, While prices started to fall in late July, natural gas utilities acquire their winter natural gas supplies throughout the year, so those recent lower prices will be blended in with the higher prices paid earlier in the year."
In other words, the recent drop in natural gas prices won't be felt as much because most utilities locked in their supplies earlier in the year when prices were higher.
For BGE customers, the utility announced back in September that residential natural gas customers can count on a $110 average increase from last winter in the gas portion of their total bill for this upcoming heating season. Assuming a normal winter, the BGE average residential customer ccan expect to pay about $792 during the season, which lasts from Nov. 1, 2008, through March 31, 2009.
The one bit of good news for everyone is that the AGA says there are ample supplies to meet demand. Yea, I know. You can't go running to the bank with that one. Sorry folks.
(Getty Images)
Categories: Economy, Energy/Utilities
Comments
Our bill already went up. My husband hadn't read about this yet and got the bill last week. he about passed out when he saw our budget billing had gone up considerably. I think it was about $35 more but I'd have to go back and look. Which is sad since we ran no heat or AC for all of September....but the budge billing spreads it all around...
DD: Holly, I'm waiting to see how it affects my budget billing, too. Thanks for giving me an idea of what to expect so I won't pass out!
Posted by: holly | October 24, 2008 11:46 AM
For whatever it's worth, my six-unit coop building is about to switch from oil to natural gas. The heating contractor who is making this change -- at a cost of about $5,000 -- tells me he's converting furnaces all over the city.
In researching the matter prior to making the decision, I learned that the Department of Energy was predicting 31 percent increase in heating oil costs for the coming year compared to 22 percent increase for natural gas.
Also, I learned that a virtually identical building to ours paid about two-thirds as much for gas as we paid for oil in the last heating season, when our oil cost an average of $3 a gallon. That represented a four-fold increase from five years ago.
I might also add that after the conversion, we will keep our oil burner close at hand for reinstallation if the price of gas goes up and oil comes down. The heating contractor said the reinstallation can be done at a relatively low cost.
DD: Thanks for the interesting post, Ray. Anyone else out there switching from oil to gas? If you've done it already, are you noticing that you're saving more?
Posted by: Ray Jenkins | October 27, 2008 8:11 AM
Lock in rates are in now for the 2008/2009 winter in the northeast. Mine is $1.269/therm. Does this sound like a good lock in rate. Last years lock in rate was $0.99/ therm. Talk about a 30% raise!!!!
DD: Looks like the Natural Gas Association wasn't kidding when they said there would be an increase this year. eeesh.
Posted by: Randy | November 9, 2008 1:18 PM