Contact your Congress critters to let them know that you are tired of high gas prices.
Posted on 07/07/2008 4:32:28 AM PDT by Libloather
High natural gas costs expected to boost heating bills this winter
By THOMAS CONTENT
tcontent@journalsentinel.com
Posted: July 6, 2008
Consumers should expect energy price sticker shock to continue well past the summer driving season, as pain at the pump is poised to give way to furnace frustration next winter.
The price of gasoline, above $4 for the past month, is on people’s minds — and it’s visible at nearly every major intersection. But another energy jolt may be coming as the price of natural gas, the primary fuel used to heat Wisconsin homes, is at historic highs for this time of year.
Natural gas futures have jumped 82% since the start of the year. Heating oil and propane prices are also soaring.
The increased natural gas prices already have resulted in electricity bills jumping twice since March for customers of Milwaukee-based We Energies and Green Bay-based Wisconsin Public Service Corp. Including increases authorized for three other state utilities, customers of the state’s five investor-owned utilities have seen rates rise by $210 million since the start of the year.
Spokesmen for the state’s large natural gas utilities said it’s too early to predict what customers may pay this winter. The futures price of natural gas, which finished last week at its highest point in more than 2 1/2 years, could still fall below its current, abnormal high, they said.
“Prices right now are in the scary range,” said Kerry Spees, spokesman for Wisconsin Public Service, an electric and natural gas utility. “It makes you look toward the winter with a little trepidation.”
At the same time, he said, prices spiked in 2005 after hurricanes damaged natural gas rigs and curtailed gas production. But a mild winter helped to avoid the 50% and higher jumps that some in the industry had forecast.
Many energy experts say there’s no guarantee that this winter’s heating bills will soar, but all signs are pointing in that direction at this point.
“Now would be the time for residential users to look at weatherization to reduce their natural gas bills — or they could be in for a major sticker shock this winter,” said Valerie Wood, president of Energy Solutions Inc., a Verona consulting firm that advises businesses on energy price trends.
Trends watched
Utilities say they are watching trends closely and will warn customers sooner than they have in prior years, if the current pricing trends persist.
Wood says there are so many banks investing in commodity prices right now that it’s hard to foresee prices falling dramatically in the coming months.
Consultants who advise homeowners on ways to seal air leaks and boost insulation are typically swamped in the late fall and winter months, so now is a good time to move ahead with plans to boost a home’s efficiency, said Kathy Kuntz, director of energy programs at the state Focus on Energy program.
“If you wait until you get that first really high bill, and then it’s November, your options are more limited,” she said. “When it’s already cold, most of the heating contractors are busy responding to ‘no-heat’ calls, and you’re going to have fewer options in terms of who’s available to help you.”
The Focus on Energy program offers cash-back rebates to homeowners who shore up leaks in their homes, as recommended by energy consultants.
“Sometimes people will have an assessment done and initially they’re geared up to get the work done, and then life gets in the way. They meant to call a contractor to come over and haven’t gotten around to it,” said Sue Hanson, single-family homes program manager with Focus on Energy. “These increased rewards are one of the things we’re doing to nudge people to get the work done.”
Potential for price spikes
The price of natural gas isn’t something people normally worry about in the summer. Most homeowners rely on natural gas for water heating and perhaps clothes drying at this time of year.
School districts, too, should be wary about potential price spikes this winter, said Kuntz. Many were caught off-guard when prices soared in the winter several years ago. Constrained by revenue caps, districts often struggled to pay rising energy bills.
The state’s Office of Energy Independence is working with a group of school districts in northern Wisconsin that are switching to wood and wood-pellet-burning heating systems, Jenkins said.
Focus representatives, meanwhile, are contacting school districts that were considering replacing their boilers, urging them to proceed with projects sooner rather than later because the payback will be shorter if gas prices remain high.
For utilities, the late spring and first part of summer are generally a time to replenish the stockpiles of natural gas that are stored in underground caverns for use when demand soars in the winter. Wisconsin utilities typically buy gas and store it in underground repositories in Michigan.
We Energies, the state’s largest utility, buys about 35% to 40% of its natural gas ahead of time and stores it for the winter. The utility also buys a significant share of its gas ahead of time through fixed contracts, We Energies spokesman Brian Manthey said.
Traditionally, the price of natural gas rises in the winter, when demand is high, and again in midsummer when heat waves prompt utilities to fire up more power plants powered with natural gas.
But late spring and early summer are typically times when the price of the fuel has eased.
Not so this year, as the price of natural gas has tracked higher along with the price of crude oil and other forms of energy.
“One of our main problems right now is that our utilities are having to pay essentially winter prices for gas in the summer, and natural gas prices around the country are at historic highs for this time of the year,” said David Jenkins, market development director at the state Office of Energy Independence.
“Utilities can’t risk not putting gas in storage, because then they’ll run into reliability problems (in the winter),” said Wood.
What’s driving prices?
What’s driving up the price of natural gas? Analysts attribute the run-up in part to supply concerns earlier this year, when a key portion of the natural gas supply network was out of service for longer than expected. Other concerns include the fact that across the country, utilities haven’t put as much into storage as they had at the same time last year.
But some observers, including Wood, attribute much of the price appreciation to speculation. Investment banks have expanded their use of index funds that buy into a host of commodities, including energy, said Wood.
That’s helped fuel the dramatic rise in prices this year, she said.
The price increases hit large manufacturers with a double dose of higher prices, said Todd Stuart, executive director of the Wisconsin Industrial Energy Group.
Manufacturers rely on natural gas to run some of their industrial processes, and then they are paying higher electricity rates — in some cases up 7% to 10% since the start of the year, because of rising natural gas prices.
“It’s really eating into their bottom lines,” he said of energy-intensive industries such as the paper industry. Wisconsin, the leading papermaking state, is poised to lose 1,000 jobs in the sector this year as companies close mills in Port Edwards and Niagara.
Utilities say summer and winter weather will go a long way toward determining how expensive heating costs are this winter.
“There’s no question the price trend is not encouraging at this point,” said Manthey of We Energies.
Relief could come if there’s a cool summer nationwide and if there aren’t hurricanes that curtail natural gas production in the Gulf of Mexico.
“But the flip side of that is prices right now could look pretty good if we have bad hurricanes and a bunch of heat waves throughout the country. In that case, it’s going to go up from here.”
Contact: Brendan Daly/Jennifer Crider, 202-226-7616
Washington, D.C. – House Democratic Leader Nancy Pelosi released the following statement today on President Bush’s, Speaker Hastert’s, and the Republican Congress’ empty rhetoric on gas prices. Key facts on the Majority's failure to address gas prices follows Pelosi’s statement.
With skyrocketing gas prices, it is clear that the American people can no longer afford the Republican Rubber Stamp Congress and its failure to stand up to Republican big oil and gas company cronies. Americans this week are paying $2.91 a gallon on average for regular gasoline – 33 cents higher than last month, and double the price than when President Bush first came to office.
“With record gas prices, record CEO pay packages, and record oil company profits, Speaker Hastert and the Majority Congress continue to give the American people empty rhetoric rather than join Democrats who are working to lower gas prices now.
“Democrats have a commonsense plan to help bring down skyrocketing gas prices by cracking down on price gouging, rolling back the billions of dollars in taxpayer subsidies, tax breaks and royalty relief given to big oil and gas companies, and increasing production of alternative fuels.”
* * *
Key Facts on the Majority’s Failure to Address Gas Prices:
President Bush, Speaker Hastert and the Majority Congress wrote and passed a Republican energy bill that President Bush’s own Energy Department said would raise gas prices on American consumers. Big oil and gas companies wrote the Republican energy bill, and the American people paid the price.
The Majority rejected imposing tough penalties on price gouging companies three times in the past year, since that time, gas prices increased by another 11 cents a gallon.
Speaker Hastert and the Majority have been blocking action on Congressman Stupak’s Federal Response to Energy Emergencies Act (H.R. 3936) since last September, which would protect American consumers from high gas prices by empowering the FTC and the DOJ to investigate and prosecute oil companies engaged in price gouging at each stage of the energy production and distribution chain and outlaws market manipulation.
http://www.house.gov/pelosi/press/releases/April06/Rubberstamp.html
Destin Dome Announcement by White House
Major Hit to Natural Gas Supply
http://www.ngsa.org/docs/pressrelease/2002/DestinDomeAnnouncement5_29_02.pdf
We need to increase the available places for drilling Natural Gas as well as Oil.
“The state’s Office of Energy Independence is working with a group of school districts in northern Wisconsin that are switching to wood and wood-pellet-burning heating systems, Jenkins said.”
hmm....switching to wood? ....the Greens ain’t gonna like that....raping the forests and all; not to mention putting clouds of smoke in the air.
.....we live in the mountains of NC and have been working up wood for several months now as have many people on our road....local builders have been creating wood piles when they clear land....local power tool dealer donated the use of a splitter for volunteers to use...it could be a very cruel winter for many people this year.
With rhetoric like that to deal with, "big oil" should just pack up and move their operations to countries who actually want the oil companies' business and products. Pelosi is clueless about the world and would be better selling anti-wrinkle cream on shopping tv than she is in her current job.
And then again, there are the stories about 40 large jet aircraft engines being used to pump natural bas back into the ground at the Alaska oil fields...
The latest estimate of building the pipeline to Alberta where it would feed other existing pipelines feeding the lower 48 is $30 billion. It has also suffered decades of political battles delaying the project over and over.
For example:
http://www.wtopnews.com/?nid=111&sid=1324271
It's going to get interesting, starting next month when people start to fill their heating oil tanks.
Do a google search of “LNG delayed”
Thanks to this article, I just scheduled a refill myself.
I have about 6 cords of wood seasoning in the sun. I also have about 30 acres of grass. I’ve been considering buying a pelletizer and pellet stove.
The thoughts of a pellet driven car has also been perculating in the back of my mind.
There are going to be some cold north easterners this winter, I wonder if it will change their political leanings?
I've been worried about my mother, she lives on social (in)security, last time she filled her propane tank, it cost her an entire months SS. It will be worse next time.
My only choice (that I can see) is to fill it for her and look into installing a pellet stove.
I've also started my "winter stocking-up" early -- packing the freezer with meat, buying rice and flour, and hitting the ding-n-dent can store to lay in soup and other canned goods.
You could always buy a couple options contracts on NG futures (like NATURAL GAS Sep 2008 (NYMEX:NG.U08)
If people start having to pay four and five dollars a gallon for heating oil and equivalent prices for gas and other sources of energy, there’s going to be rioting in the streets everywhere.
I’ve been patting myself on the back for not tearing out my old wood stove when I had natural gas put in a few years ago. I have a couple cords dry and ready and will put in more as winter approaches.
The process is called re-injection.
It might be a good time to re-evaluate the situation. Perhaps move out of untenable situations or renovate the house so it doesn’t need so much heating.
Would you mind sharing a source? Everything I have found is commercial size/quality and quite expensive.
Because shipping LNG is impossible right? /sarc
The process is called re-injection.
If the people fine out about it the process will be called "rioting" and "civil unrest"....
There is a guy on Ebay importing small chinese pelletizers of various capacities.
I have the land, mower and the grinder. I just need a hay rake, a good way to move the material and a pelletizer.
I figure I have at least 60 tons of potential fuel sitting in the field.
That is not realistic. The Alaska Natural Gas Pipeline is currently in hearings at the State Legislature. Find out what is going on.
If you are planning on burning it this winter, it really should be up and drying now.
Three months of hot summer weather will do a good job of starting the drying process but I generally do not use wood that has seasoned less than 9 months with three of those months being hot dry summer.
Through thousands of miles of ice every fall, winter and most of spring? Yes, impossible.
This Natural Gas is on the North Slope, it has to first get to an ice free port like Valdez does for Oil. It takes a pipeline first, regardless if you build a pipeline to Alberta, or build a pipeline to Valdez, an export terminal, then multiple import terminal on the West Coast where they are not quite eager for LNG terminals on their coast.
Most likely a LNG terminal in Alaska will require an LNG terminal in Mexico with more pipelines into the US to bring North Slope Natural Gas to the lower 48 via LNG. That has actually been one of the more likely proposals on the LNG method.
Contact your Congress critters to let them know that you are tired of high gas prices.
Bingo. It’s another reason to stock up now!
I burn juniper and pinyon which has been dead standing for at least a year before they let me cut it. Because of the beetle infestation there's lots of that around. Wishing you a big, warm and cozy carbon footprint this winter.
Have creosote free Christmas yourself.
Cut some extra, it will probably be very valuable this winter.
My carbon footprint will be shrinking this winter, prebuy for propane is $2.40!!!!! I may need to put up an extra cord or two. I just need to engineer a way to heat my water with wood.
Tap the NY an TX formations?
Which New York and Texas Natural Gas fields are not being drilled?
It is not that they are not being drilled, it is that the drilling is in its infancy.
Specifically, the huge formation in TX that was written about last week - everybody was floored by the volume of gas produced. And, the PA/NY formation, which is also newly exploited.
I came accross a stat last week - the US is 99%, it was reported, self-suficient with regard to NG.
So, it seems, speculation is really playing a part.
Isn’t it?
Prices are already above $4 in many places.
That statistic is wrong.
In 2007 we consumed 23.1 Trillion cu ft of Natural Gas
http://tonto.eia.doe.gov/dnav/ng/hist/n9140us2a.htm
We produced 19.3 Trillion cu ft of Natural Gas or ~84% of our demand.
http://tonto.eia.doe.gov/dnav/ng/hist/n9070us2a.htm
Ooops. That’s what I get for believing an article.
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