Fueling prices

September 25, 2005|By TAMELA BAKER


No matter how you heat your home, you likely can expect to pay more this winter to stay warm.

Exactly how much more still is open to speculation, industry officials said.

"We've been anticipating it would be higher," said Columbia Gas spokesman Rob Boulware, but he said exact numbers haven't been established yet. Quarterly rate filings are due at the end of this month and more information would be available then, he said.

Boulware said Columbia Gas officials expect the company will have to pay more for its gas supplies.

"We pass that through dollar for dollar without markup or profit," he said.

Mountaineer Gas customers in Berkeley County, W.Va., will see base rate increases of about 5 percent beginning in November, as approved last month by the West Virginia Public Service Commission. Another increase has been approved for next year, but the PSC imposed a moratorium on further increases until 2009.


Several factors could affect energy costs during the coming heating season, local suppliers said.

"It's really anybody's guess" what final costs will be, said Phil Adams, president of Steffey & Findlay, which supplies home heating oil. Prices will depend on "the world situation and the severity of the weather," he said.

"We're encouraging our customers to fill up in the early part of the season," Adams said.

"It changes daily," said Gary Grove, president of Solliday Oil, another local fuel oil supplier. "It's hard to pinpoint what the futures will do. It's going to be an interesting winter."

If the winter is mild, prices could ease, he said.

"We're hoping it comes down to midsummer levels, Grove said. "We have to buy it, too." And when prices are high for suppliers, "it's a whole lot more to finance," he said.

For now, both Grove and Adams said the price of a gallon of fuel oil is nearly $1 more than this time last year.

On Monday, Solliday Oil's price was $2.54 per gallon, compared to $1.64 last year. Steffey & Findlay's price Monday was $2.59, compared to $1.64 last year.

A volatile market

The price for propane gas has gone up as well, though not so significantly, said Kay Dunn, president of Shawley's Superior LP Gas. While the cost of a gallon of propane cost about $1.85 last year, Dunn predicted this year's costs would top $2 per gallon.

For now, the market is a little volatile, Dunn said.

"Until it calms down, we're not sure what the final price will be," she said.

A good barometer is to watch what happens to gasoline prices, Dunn said.

"As gas prices go up, others will," she said.

"The general propane market is up approximately 40 percent over last year," said J. Randall Thompson, president of Thompson Gas. "The hurricanes hitting the Gulf could have a tremendous impact on refined and processed products like propane, which could lead to sharp increases in the short term. In the long term, markets should move lower. How much is anyone's guess."

The good news for Allegheny Energy residential customers with electric heat is that the basic rate will not change, spokesman Allen Staggers said. Rates are capped in Maryland through 2008, he said.

As far as the real cost for heating is concerned, Staggers said, "the determining factor will be just how cold it is."

Customers might see a bump in their winter bills, he said, "just because you're indoors longer."

The base rate will remain the same this winter for City Light customers in Hagerstown. City Light Department Manager Mike Spiker said the city's current power contract for residential customers remains in effect until next July.

"I'm one of my customers, too," Spiker said. "We do our best to keep the prices down."

Current estimates

The U.S. Department of Energy's Energy Information Administration (EIA) recently increased its winter heating cost estimates based on the impact Hurricane Katrina had on oil refineries in the Gulf Coast and cautioned that the pace of recovery, already delayed due to evacuations for Hurricane Rita, could result in still-higher estimates on Oct. 11, when the EIA is to release updated figures.

The EIA currently is projecting that natural gas prices will increase by 71 percent, electricity costs will rise by 17 percent, heating oil by 31 percent and propane costs by 40 percent.

Natural gas price increases could vary from 69 percent to 77 percent depending on the speed of recovery from the effects of Hurricane Katrina, the EIA said.

A global issue

Industry experts say the energy market is being hit by several factors both globally and within the United States, revolving around the finite amount of nonrenewable fuels and a growing demand.

"There's a twofold reason. One is external, the biggest driver is China, followed by India ... they are absorbing more coal, more natural resources for energy production than ever in their history," said Tom Lane, an energy lawyer with the Charleston, W.Va., office of Bowles Rice McDavid Graff and Love.

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