People may want to cross their fingers in hopes that Mother Nature brings balmy temperatures this winter since natural gas prices are expected to remain higher than ever.
Wholesale natural gas prices reached a record high after Hurricanes Katrina and Rita affected production in the Gulf of Mexico, and the prices are expected to remain high in the coming months, said Rolf Lund of CenterPoint Energy.
Lund said natural gas prices initially were predicted to go up 20 percent this winter. He said with the natural disasters, speculation increased that another 20 percent.
Lund said a customer who had a $1,000 heating bill last year likely may pay $1,400 this year. The same customer spent $600 in 1999-2000, he said.
Lund said natural gas prices are unpredictable and dependent upon how much natural gas is used, which in turn depends on the weather.
"The production and demand for natural gas is very tight," said Lund. "When the hurricanes came the supply did not keep up and as a result the prices increased."
Rick Pederson of Crow Wing Power said the exact expected increase in natural gas prices varies according to different sources. He has heard natural gas prices will increase anywhere from 20 percent to 70 percent.
"There is no magic number and that is driving people nuts," said Pederson.
The wholesale cost of natural gas has doubled, and Pederson said this makes it hard for companies to keep their costs down for consumers. Crow Wing Power buys its natural gas from Great River Energy.
Pederson said fuel costs in general are increasing and people who use fuel oil to heat their homes also will pay more this winter. Heating oil used to cost under $1 a gallon and now costs $3.09 a gallon, he said. Propane prices are all over the board, but in general, Pederson said, those prices have increased by about 40 cents a gallon compared to last year's prices. Propane prices currently range from $1.50 to $1.85 per gallon and Pederson said the cost depends on local conditions, such as the time of year the propane was bought to the amount of propane purchased.
Pederson took out an old propane furnace in his home and installed an off-peak storage furnace that stores heat in the bricks at night and keeps the home warm all day. He said he has saved about $550 in a heating season.
Pederson said people should not panic. Heating costs will be higher than last year, but how high is the question, he said. It will depend on Mother Nature and the type of house.
Dean Talbott of Minnesota Power said his company has seen an increase in the number of people using electric heat -- a cost that has not increased -- to heat their home or they have switched to a dual fuel system.
Karl Skog, owner of Crosslake Sheetmetal Heating and Air Conditioning in Crosslake, said dual fuel systems are making a comeback.
Skog said they have installed many of these systems this year because residents want to save money. A dual fuel system uses electric and natural gas to heat a home. Skog said on average a homeowner could save about $1,000 a year on heating bills.
This system can be installed in homes with furnaces or water heaters, Skog said.
Two other options to save money on heating bills are to add an air-to-air heating pump or a groundwater geothermal pump that can be used along with the furnace, Skog said.
Doug Quam, service manager at Thelen Heating and Roofing in Brainerd, said a common error people make that increases their heating costs is they ignore regular maintenance of their furnace.
"We get a lot of service calls where people could have saved money if they would have taken care of their furnace," said Quam. "Furnaces are like cars and people have to change the filters in order for it to operate correctly."
Quam said another simple and cheap tip to save money this winter is to seal homes to make them more energy efficient, such as by putting plastic on the windows.
JENNIFER STOCKINGER can be reached at email@example.com or 855-5851.
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