U.S. Winter Heating Bills to Be Higher Than Expected, DOE

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Thu, 07 Dec 2000, 9:45am EST U.S. Winter Heating Bills to Be Higher Than Expected, DOE Says By Stephen Voss

Washington, Dec. 6 (Bloomberg) -- U.S. heating bills will be ``substantially' higher this winter than forecast a month ago after a surge in natural gas prices and a slower-than-expected rebuilding of oil supplies, the U.S. Department of Energy said.

Homes using natural gas will see a 50 percent jump in winter heating bills from a year ago because of higher fuel costs and colder weather, and those using heating oil will see expenses rise by one third, the department said.

``As was the case with heating oil, November ended with lower- than-anticipated gas storage levels, increasing the probability that the heating season will end with record-low levels of natural gas in storage,'' the DOE's Energy Information Administration said.

The cost of natural gas for residential users will average $9.21 per thousand cubic feet (about $9.21 per million British thermal units) this winter, up 40 percent from a year earlier, the DOE said. Heating bills will rise even more than the price because cold weather will increase demand, it said.

On the New York Mercantile Exchange, where wholesale natural gas is traded, prices surged as much as 19 percent today to a record of more than $8 per million Btu. Prices are up about 260 percent this year.

Retail heating oil prices are expected to average $1.52 a gallon this winter, 12 cents more than the department's forecast a month ago, and 34 cents more than last winter, which was the warmest on record.

Crude Oil

The department said it expected New York crude oil futures ``to remain near or above the $30-per-barrel level for some time, perhaps as long as through the middle of 2001.''

In recent trading, crude oil for January delivery was down 23 cents, or 0.8 percent, at $29.30 a barrel, after dropping about 18 percent in the past two weeks.

The DOE attributed its prediction of continued high oil prices to world oil inventories it says still aren't being replenished at a fast enough rate.

The Organization of Petroleum Exporting Countries has increased its production four times this year and the U.S. government has recently released oil from its emergency reserves.

The DOE lowered its expectations for oil inventories in industrialized countries ``to reflect the annoying reality of languishing actual stockpiles amidst claims of large aggregate excess production.''

This marked a turnaround from last month's outlook -- issued on Nov. 8 when oil was trading at $33.24 a barrel. In that report, the DOE said oil prices were ``defying gravity'' given the weight of extra world supply, and it had predicted prices would fall by $4 to $5 before the winter's end.

http://quote.bloomberg.com/fgcgi.cgi?mnu=news&ptitle=Top%20World%20News&tp=ad_fin&T=au_storypage99.ht&s=AOi6TERS1VS5TLiBX

-- Martin Thompson (mthom1927@aol.com), December 06, 2000


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