WASHINGTON — Americans face sharply higher heating bills for natural gas and heating oil this winter, but the price rise won't be as steep as initially feared, the U.S. government said on Wednesday.
With oil and natural gas supplies tight due to hurricane damage in the Gulf of Mexico, winter temperatures will be more important than usual in determining wholesale and retail prices, the U.S. Energy Information Administration said.
"Clearly, we expect significant price expenditures (for heating fuels) this winter compared to last winter," EIA Administrator Guy Caruso told reporters.
In the U.S. Midwest, the biggest user of natural gas for heating, residential bills for the entire winter will rise by about 61 percent to an average $1,377, the EIA said in its winter outlook report. That is less than the 71 percent jump the EIA forecast several weeks ago.
Nationwide, natural gas costs this winter will rise by 48 percent, the EIA said.
Northeastern households, which depend mostly on heating oil, will spend nearly 30 percent more for winter heating, or an average $1,607, the EIA said. That is also less than previously thought.
Caruso said the EIA lowered its forecast for winter heating fuel expenditures because the agency does not think the weather will be as cold and it had overestimated how much utilities would pass on higher heating fuel costs to their customers.
Nationwide, consumers who warm their homes with electricity will see a more modest increase of 5 percent in winter bills which will average $755, the agency said.
In response to the EIA report, U.S. lawmakers on Wednesday called on the Bush administration to support more funding for the federal program that would help low-income families pay their expensive winter heating bills.
The estimates were based on the U.S. government's forecast that winter temperatures in much of the nation will be colder than last year's warmer-than-normal winter. "Should (much) colder weather prevail, expenditures will be significantly higher," the EIA said.
However, the National Oceanic and Atmospheric Administration said it could not predict if the key heating regions -- the U.S. Midwest and Northeast -- would have colder, warmer or average temperatures in December, January and February.
The EIA, which defines winter as October through March, said heating degree-days for that period are forecast to be 3.2 percent colder than last winter and slightly colder than average.
Heating degree days are calculated by the difference between 65 degrees Fahrenheit and the average of the high and low temperatures of a particular winter day. The calculation indicates household energy consumption for space heating.
"Prices for petroleum and natural gas will remain high due to tight international supplies of crude and hurricane-induced supply losses," said the EIA.
The EIA report also said overall U.S. demand for natural gas would fall by about 1.2 percent in 2005 due to sharply higher prices. However, industrial demand for natural gas will tumble by nearly 8 percent from last year as plants switched to cheaper fuels.
In 2006, overall U.S. demand for gas will rise by 3 percent, with industrial demand increasing by 6 percent. "The industrial rebound in 2006 is partly because of assumed reactivation of damaged industrial plants in the Gulf of Mexico region but also reflects renewed fuel demand growth as domestic industrial plants adjust to higher prices," the EIA said.
The agency said U.S. natural gas production this year would fall by 3 percent, due largely to disruptions caused by Hurricanes Katrina and Rita. In 2006, output should rise by 4.2 percent, the EIA said.
Additional reporting by Julie Vorman
WASHINGTON — Home heating costs could rise by between a third and a half this winter, the Department of Energy said, as world-wide energy demand remains high and production in the U.S. remains strained following damage caused by hurricanes Katrina and Rita.
The department's annual fuels outlook, released Wednesday, predicted that households heated with natural gas will see the sharpest increase, paying an average $350, or 48%, more this winter than last. Residents of oil-heated homes will pay roughly $378 more, a 32% rise from last year. Propane users will pay roughly $325, or 30%, more than last winter, and homes heated by electricity will cost about $38 more, or 5%.
Weather plays a major role in determining heating costs, and the National Oceanic and Atmospheric Administration is predicting slightly warmer-than-normal temperatures for December, January and February, the peak of the winter heating season. That might provide some relief, particularly for states in the Midwest, where 75% of households rely on natural gas for heating.
Meanwhile, the Energy Information Agency, the Department of Energy's statistical arm, said the pace of repairs to hurricane-damaged wells, refineries and pipelines is stepping up. Refinery outages will drop sharply this month, officials said, but persist into 2006. Oil and natural-gas output in the Gulf of Mexico won't be back to normal until late March, the end of the heating season.
Overall, the EIA said total petroleum demand in the U.S. this year is projected to fall slightly, averaging 20.5 million barrels a day, or 0.9% less than last year. The drop is attributed to a combination of hurricane-related disruptions and reduced demand due to higher gas prices.
Higher heating bills, combined with heightened gasoline prices, may force many Americans to spend up to 20% of their take-home income on energy costs this winter, said Mark Wolfe, executive director of the National Energy Assistance Directors' Association, which represents the state agencies that distribute money to help low-income families pay their fuel bills.
The high heating prices expected this winter will be a blow to families that depend on the Low-Income Home Energy Assistance Program to subsidize their energy bills. Liheap helps consumers pay about half of their energy bill, which last year averaged $600, but the Department of Energy's new estimate cast doubt on whether the proposed Liheap funding for this winter will cover the costs.
"For low-income families, this will truly be a crisis when they get these bills," Mr. Wolfe said.
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