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Feeling the heat

  • Source: Pennsylvania State Data Center
    Source: Pennsylvania State Data Center
Published December 08. 2012 09:03AM

This past week was a gift of almost balmy weather, but keep an eye on that heating fuel tank: Forecasters predict a colder winter this year, and as the mercury plunges, the cost of keeping warm is heating up.

Home heating oil cost is expected to rise 21 percent over last year, and natural gas is expected to rise even higher, according to the most recent projections from the U.S. Energy Information Administration.

That's because more will be used, and at a higher price. The volume used by the average household is expected to increase by 17.2 percent, and the average price per gallon is expected to rise by 3.3 percent, said Tancred Lidderdale of the EIA.

That means the average cost of heating a home with oil would rise to $2,526 this winter, up from $2,087 last winter.

Locally, heating oil prices ranged from $3.57 to $3.79 a gallon as of early this week.

One local home heating oil company says that while there's nothing small businesses can do about the basic prices, set by commodity traders, hers is doing what it can to keep costs under control for customers.

The daily price per gallon of oil fluctuates daily. To determine the company's price each day, Lisa Hiles of Hiles Bros. Plumbing, Heating & Fuel Co., Summit Hill, must also factor in the costs of transporting the oil. That cost includes diesel to fuel the trucks and the time it takes an employee to go and fill the trucks.

The closure in June of the Sunoco terminal in Tamaqua boosted the transport cost for local companies. They must now travel to dealers in the Lehigh Valley or other areas for their oil.

"Now, just to get a load of oil takes two hours. When we were getting it in Tamaqua, there was virtually no down time," she says.

Her husband and company co-owner Dave Hiles has been traveling to the Lehigh Valley for oil. While there's still the cost of diesel fuel to run the trucks and wear and tear on the truck, at least they don't have to pay an employee extra to make the trip.

"That's one way we're keeping the cost down for our customers," Lisa Hiles said.

The majority of Pennsylvania households use natural gas, which is also getting more expensive, 23.1 percent more expensive this year, according to EIA. Again, because more gas is expected to be used, and at a higher price than last year.

The average natural gas heating bill is expected to jump from $832 last winter to $1,024 this winter.

But the news isn't all bad: Propane prices are expected to drop by 2.8 percent, and electric by 4.3 percent.

"The biggest expected change in household heating fuel expenditures from last winter comes from consumption.

Last winter was one of the warmest on record and the forecast return to near-normal temperatures this winter means that the average household that uses heating oil, propane, or natural gas for space heating may consume about 17 percent more fuel this winter compared with last winter. The increase in total electricity use of 10 percent is smaller because the use of electricity for cooking, lighting, and other electronics are not affected by weather," Lidderdale said.

"The biggest forecast increase in average prices is in natural gas at about 6 percent. Because of the growth in natural gas production over the last few years, such as from the Marcellus shale in Western Pennsylvania, spot (wholesale) natural gas prices last winter were the lowest level since the winter of 2001-02. However, the low spot natural gas prices have contributed to a slow down in drilling activity and a recovery in natural gas prices from last winter's low," he said.

Lidderdale said that heating oil prices are driven by world crude oil prices, which are expected to remain near least winter's levels.

The drop in electricity prices is due to more use, he said.

"As consumption increases the total electricity bill increases, but the average price per kilowatt hour used declines because household electricity bills include a fixed cost component (to cover investment in generation and distribution infrastructure) that does not change with the level of consumption," Lidderdale said.

The EIA does not track anthracite prices.

"Anthracite use in general, and especially for home heating, is quite small well less than one tenth of one percent of the U.S. coal market," said U.S. Office of Energy Analysis Economist Michael B. Leahy.

In our area, the price is generally about $200 a ton.

Most people in the northeast use natural gas to warm their homes. According to EIA figures, that came to 11,330,000 last winter. Next most popular was heating oil, used by 5,770,000 households. About 764,000 households used propane, and another 2,861,000 used electricity.

The tight economy has moved many people to burn wood for heat. Last winter, about 545,000 households in the northeast used wood-burning stoves for heat. That number is expected to increase this winter by 7.5 percent, to 586,000, according to EIA projections.

Although wood can be had for free, those who use this heating method must be careful to follow safety procedures, including keeping flammable materials well away from the stove and chimney, and making sure the chimney is cleaned every year and lined.

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