Heating fuel prices expected to stay high

A cold and expensive winter could continue for Chicagoans asnatural gas prices show no sign of easing.

Government and industry officials told the Senate Energy andNatural Resources Committee that the prices stem from too littlenatural gas to meet demand.

"The economy has been robust," pushing up industrial and utilitydemands for fuel, said Roger Cooper, executive director of theAmerican Gas Association. "And heating demand has been high in thisearly winter season due to unusually cold weather."

"Volatile (natural) gas prices will prevail until significantlymore gas supplies enter the market," added Mark Mazur, head of theEnergy Information Administration.

The Energy Department estimated heating bills for natural gasconsumers-even with normal winter weather-will be 50 percent higherthis winter than last, averaging $834 this season for a typicalMidwest household.

While higher prices have produced new drilling, significant newproduction would be needed before the "fairly strong mismatch betweensupply and demand" gets straightened out to force prices to retreat,Mazur said.

Meanwhile, one state energy official said the country is alreadyin an energy crisis without enough money to help poor families payfor heating bills.

"Skyrocketing prices for natural gas, combined with rising heatingoil, kerosene and propane costs, and attendant electricity priceincreases for many households, leave the most vulnerable householdsat serious risk," said Deborah Schachter, speaking for the NationalAssociation of State Energy Officials.

Schachter, head of New Hampshire's state energy office, urgedCongress to approve this fiscal year's overdue budget for low-incomeenergy assistance. The $1.4 billion is caught up in budget wrangling,although the fiscal year began 10 weeks ago.

For some time, economists have predicted that this winter wouldbring sharply higher heating costs. Unusually cold weather has addedto the upward pressure on prices.

Wholesale natural gas prices have soared since last winter,spiking to between $9 and $20 per thousand cubic feet recently atmajor markets around the country. That's compared with a little morethan $2 per 1,000 cubic feet at the same time last year.

Natural gas sold this week at the New York Mercantile Exchange forJanuary delivery approached $10 per 1,000 cubic feet. In California,the wholesale price for the fuel recently leaped beyond $40 for 1,000cubic feet because of a supply, distribution and demand crunch.

Sen. Frank Murkowski (R-Alaska) wondered why the supply and demandcrunch was not anticipated: "The demand for natural gas in the futurehas been grossly underestimated."