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News > Jobs & Economy
Dow Jones Hot prices seen for a chilly winter
Industry groups warn consumers that heating costs will climb this season.
August 19, 2005: 5:55 AM EDT

WASHINGTON (Dow Jones) - Three energy-industry groups issued a warning to U.S. consumers Thursday, saying they foresee higher fuel prices and home heating bills ahead this winter.

"We do anticipate higher prices again," said Dave Parker, president of the American Gas Association.

Weather is the key factor in determine how high fuel costs climb during the winter heating season.

A short-term energy outlook recently released by the Energy Department said pressure on natural-gas prices will be sharpest in high-demand areas like the central U.S. Northeast households will also likely be hit with higher costs for delivered natural gas this winter, the report said.

Natural-gas utilities don't make a penny in profit on the price of fuel but can typically pass these expenses along to customers.

Parker said many American Gas Association member utilities are now considering filing rate cases with regulators to pass additional costs along to customers.

The impact of natural-gas prices may be felt by a large number of customers - roughly 66 million Americans, or 52%, of U.S. households, heat with natural gas. & #194;

But natural gas isn't the only fuel facing record prices, industry participants said.

"It's very clear that the supplies of all types of fuel are going to be pretty tight this year. Supplies of coal in some areas probably aren't going to be any different," said Connie Holmes, senior economist for the National Mining Association.

"Everyone knows how high prices have been and how volatile they are for petroleum products this year," John Felmy, chief economist at the American Petroleum Institute, echoed.

Additionally, owners of U.S. homes that use heating oil are taking their time filling up on supplies ahead of the winter -- a trend that's creating some supply concerns for the industry.

"We've been producing record amounts of distillate fuel but what we've seen in ... New England, which is a primary consumer of heating oil, we've seen our inventories of primary storage shoot up to something like 50% above average," said Felmy.

"Eventually, if you don't fill up, we run out of storage room and that creates a supply backlog," Felmy warned.

The Energy Department has predicted a 16% increase in average heating-oil prices this winter compared to last year.

Heating oil prices averaged $1.83 a gallon during the 2004-2005 heating season, a 34% rise from the previous winter.

(END) Dow Jones Newswires

08-18-05 1446ET Copyright (c) 2005 Dow Jones & Company, Inc. Copyright (C) 2005 Dow Jones & Company, Inc. All Rights Reserved.  Top of page

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