Energy Cost Likely to Rise This Winter

By Tim Hyland
The Capital (Annapolis, MD)
October 6, 2002

The likely return of cold winter weather this year will significantly boost heating costs, energy officials predict.

Last year’s mild winter drove down the average customer’s bill from Baltimore Gas and Electric Co. by 42 percent; electric heat customers spent $44 less.

The same isn’t expected this season. The National Oceanic and Atmospheric Administration is predicting a colder winter, with average to slightly above-average temperatures.

Along with that will come higher energy usage, and prices will reflect that, said Dave Costello, an economist for the Energy Information Administration.

“For anybody that heats their home, which is everyone, of course, the expectation is for considerably higher usage and consumption,” he said.

BGE has already bought and stored about 40 percent of the natural gas needed for the season, and supplies are generally good, said spokesman Sharon Sasada. She said prices for natural gas could rise 20 percent to 30 percent for the approximately 70,000 BGE natural gas customers in Anne Arundel County.

That could cost customers about $100 more for the period between November and March. Natural gas is the county’s most common heating fuel.

“It looks like it’s going to be a normal winter,” Ms. Sasada said. “We haven’t really had a normal winter for a couple of years.

Costs of heating oil are expected to rise as much as 42 percent over last season, according to the Campaign for Home Energy Assistance.

Glenn Brumwell, owner of Brumwell’s Fuel Service in Pasadena, expects heating oil prices to jump about 20 cents per gallon this winter.

Last year, prices peaked at $1.19 before dropping back down to $1.09. He’s charging $1.14 now.

Though supplies are strong, Mr. Brumwell expects uncertainty in the Middle East to be enough to boost prices through the winter.

“They’ll use that as an excuse,” he said.

David Fox, a spokesman for the Campaign for Home Energy Assistance, said a rise in heating oil prices couldn’t come at a worse time. The Bush administration has proposed $300 million in cuts to the Low Income Home Energy Assistance Program, which helps poor residents pay for power. About 53,000 Maryland residents received $27 million through the program last year, he said.

“We’re facing a very, very serious situation: higher fuel prices, a colder winter, more people in need,” Mr. Fox said.

And although oil supplies are generally strong, world oil markets are tightening as consumption increases and inventories fall. So even if no military action is taken in the Middle East, oil prices are expected to remain high for some time, Mr. Costello said. The current high prices should remain at least through 2003, he said.

Meanwhile, gasoline prices, while above average, have been stable for several months. That’s a change from 2000 and 2001, when prices fluctuated widely.

Prices and volatility are expected to increase in coming months, Mr. Costello said, tough “huge spikes’ in prices aren’t likely.

Gas prices in the Baltimore metropolitan region, which includes Annapolis, are averaging about $1.38, said Myra Wieman, a spokesman for AAA Mid-Atlantic. But the threat of military action has already caused increases in crude oil prices, and any military action would very likely send gas prices higher, she said.

“Most of it is going to depend on what happens with Iraq,” she said.