Area consumers will get a break in heating fuel costs

By Sharon Salyer

Herald Writer

Consumers worried about the souring economy could get one break this winter: Natural gas prices are expected to remain steady, while heating fuel costs could be significantly cheaper than last year.

"We see natural gas prices certainly lower than last winter and stabilized," said Bill Donahue, a senior rate analyst with Puget Sound Energy. "We think there’s less likelihood of severe price hikes midwinter than last year."

With industrial demand down and residential customers conserving, "it’s allowed time nationwide for supplies to build back up," Donahue said.

Last year, the price was 93 cents a therm, with residential customers using about 950 therms per year.

Currently, the price for natural gas is 84.5 cents a therm, he said. Prices would be even lower, except the company has a 15-cent-per-therm surcharge through June to make up for undercharges last winter, when prices skyrocketed.

Natural gas prices are just one example of a federal Energy Department prediction for lower energy prices across the board, from gasoline to heating fuels, this winter.

The predictions are based on normal winter weather, weak demand and generally ample fuel inventories.

Natural gas prices peaked last winter with prices at the wellhead of $6.20 per 1,000 cubic feet, the report federal says. This year, prices are predicted to drop to 1999 levels, below $2 per 1,000 cubic feet.

The federal agency’s winter fuels report also predicts propane costs will drop 23 percent .

Local suppliers expect the prices they charge to drop, too.

"I don’t feel we’ll see the prices we saw last year; I don’t think we’ll come close," said Steve Miller, owner of American Distributing Co., based in Everett.

Propane prices this winter should be closer to what they were two years ago, when retail charges ranged from $1.15 to $1.40 a gallon, he said.

"I think it’s going to be better than last year, but last year was an all-time record high," said Al Leavitt, president of Enrivo Propane in Arlington.

Current prices range from $1.10 to $1.25 a gallon, he said. "If we had to predict right now, we might see another 10-cent increase when demand picks up," he said of the upcoming heating season.

Leavitt and others involved in the fuel business emphasized that their predictions were based not only on average weather conditions but on uninterrupted oil supplies from the Middle East.

"All bets are off if the Middle East has supply problems or crude oil skyrockets for any one of a thousand different reasons," he said.

"We’re all guessing" Miller said. "If we had a crystal ball, we’d all be getting rich."

Gasoline prices, which normally dip in the winter months, are also projected to decline, according to the federal fuel report.

But Trilby Lundberg, a petroleum analyst, said prices which had recently dropped nearly 11 cents a gallon over the last two weeks could increase because of the recent U.S.military actions.

"Gasoline is a very market-driven commodity," said Janet Ray, spokeswoman for AAA of Washington. "If there’s adequate supply, then those prices come down. If the demand pressure starts going up and supply is tenuous, then prices go up."

Refiners have to decide what to make with the crude oil they receive, splitting supplies between gasoline, jet fuel and home heating oil, she said.

Gasoline prices have remained relatively steady since the terrorist attacks, with the statewide average at $1.68 a gallon on Sept. 11 and now averaging $1.66 a gallon, she said.

In a typical year and with typical winter weather, gas prices begin to go down after Labor Day, she said.

"Whether gas prices continue to trend lower depends on how much economic activity, including discretionary auto travel, picks up in the weeks to come," Ray said, and whether there’s any interruption in oil supplies.