Cost of Warmth Could Burn Pocketbook
Posted November 12, 2007
Raleigh, N.C. — Some residents could be in for an expensive winter, with heating oil prices skyrocketing.
The price of heating oil is up 24 percent over last year, costing more than $3 a gallon for the first time.
Kerosene costs are similarly going up, and propane prices jumped recently after a pipeline serving the Southeast ruptured and went offline for more than a week.
Residents in the Northeast will feel the pinch from higher heating oil prices the most, while North Carolina homeowners won't be affected as much because only 11 percent of homes use heating oil. Another 13 percent power their furnaces with propane.
"I think it's going to be an OK situation. I think it's going to be more expensive – the price is going to be higher – but if we get by with a mild winter, than that will balance out," said Mike Walden, an economist at North Carolina State University.
About half of North Carolina's homes are heated by electricity. Progress Energy increased residential rates by 1.3 percent in October after a 5.4 percent increase last year.
Natural gas is used to heat 24 percent of homes statewide. The nation's natural gas storage supply is at an all-time high, but PSNC Energy spokeswoman Angie Townsend said that doesn't guarantee rates won't fluctuate during the winter.
"Having a strong amount of natural gas storage is great news because it provides stability for wholesale prices," Townsend said. "A lot of time, our weather might be mild. But if they're having extremely cold weather in other parts of the country, that applies pressure to wholesale prices for natural gas."
PSNC customers will notice a different rate structure this year. Last year, the company charged a higher rate for people who used less gas, but the utility scrapped that plan after customers complained.
All residents now pay the same rate, but it increases during the colder months.
"These people who have natural gas probably are going to come out best," Walden said, adding that home heating oil users will take a double hit because they're already being squeezed by high gasoline prices.