Originally created 09/24/05

Winter warmth could be costly



NEW YORK - The thermometer read 66 degrees in Colchester, Vt., on Friday afternoon, but the town's weather-worn heating oil customers are used to thinking about winter well before the leaves turn.

"We aren't even selling oil any more," said John Quinney, the general manager of the Energy Co-op of Vermont, who was nonetheless keeping track of heating oil prices on the New York Mercantile Exchange. "Most of our customers sign up for some kind of early price protection, and our last deadline was Aug. 31."

With gasoline prices stuck at the $3-per-gallon level and dominating the headlines, many consumers have yet to give their winter heating bills as much thought as Mr. Quinney's customers. But the sticker shock is coming.

With Hurricane Rita churning toward Texas, and Louisiana still recovering from Hurricane Katrina, the nation's oil refining and natural gas hubs remained under intense pressure.

That will translate to higher prices this winter. The Energy Department's Energy Information Agency projects the retail price of a gallon of heating oil will top $2.44 next month, up 35.7 percent from last year and 79.3 percent from 2000.

The agency is expecting a tougher winter, both in weather and energy consumption. From October through March, spending for petroleum products is expected to rise 34 percent, coal by 16 percent and natural gas by 52 percent.

For all of 2005, Americans are expected to spend $1.08 trillion on the fuel and energy needed to run their cars, power their offices and heat their homes. That represents 8.7 percent of the nation's annual gross domestic product, the highest percentage spent on energy in 20 years.

Those figures, it should be noted, were published after Hurricane Katrina but before Hurricane Rita.

"Obviously, there may be additional impacts on our customers due to Rita, but it's impossible right now to know what they will be," said Mark Stultz, the director of public affairs for the Natural Gas Supply Association.

The association estimated, pre-Rita, that heating costs for Midwest homes could rise as much as 77 percent from last winter. Some of that increase is the result of a mild winter last year, but soaring prices are the biggest culprit.

Other regions' costs might depend on how far they are from major fuel facilities and ports, and on the weather.

Though oil and natural gas will be expensive, it's unlikely there will be shortages of either. In fact, retail heating oil dealers are carrying higher-than-average inventories for this time of year. But even that could be a cause for worry.

"My concern is that consumers have been putting off filling their heating oil tanks because of the high costs," said Sara Banaszak, a senior economist at the American Petroleum Institute. "But prices, obviously, haven't gone down. So while the supplies will be there, they will be more expensive."

Natural-gas customers will also see higher bills this winter, as will people who heat their homes with electricity, as utilities increasingly use natural gas to generate power.

Consumers hoping to reduce their heating bills this winter have a few options. Weatherizing one's home - using storm windows, sealing cracks in windows and doorways, and getting a programmable thermostat for example - can help keep heat inside and reduce costs. And turning thermostats down a degree or two can provide long-term conservation savings.

"If most people were able to turn their thermostats down two degrees, that could offset the disruptions from at least the first hurricane," Mr. Stultz said.

Some people are actively seeking heating alternatives. Sales of wood stoves at Cricket on the Hearth in Rochester, N.Y., have climbed sharply through the summer, General Manager Charlie Turner said.

"People are very wary about what their heating bills are going to be, so they're turning to wood stoves," he said.