Gas prices rise as temperatures fall

www.shreveporttimes.com Staff and Wire Reports Posted on January 27, 2003

With futures prices for natural gas at their highest level in two years, homeowners across the country are shocked has they open their winter energy bills.

But Shreveport-area homeowners aren't seeing a dramatic hike in their bills. Monthly bills climbed about 5 percent from December to January. said Joe Chambers, CenterPoint Energy district manager for Northwest Louisiana. There may be another 5 percent jump next month as the market price of natural gas increases, he said.

About half of the company's current supply comes from its reserves, which are filled when gas prices tend to be lower. That helps smooth out spikes in price in the winter months.

"It is true that gas prices are inching up ... but not the 20 percent increase like some places across the country," Chambers said.

The price gains elsewhere have been much higher than predicted. In September, the EIA estimated the cost of heating a home with natural gas would rise 17 percent for the October-March winter season from last year. Now, the agency is expecting the gain to be twice that, with bills totaling more than $800 this winter.

The factors driving the increases are the same no matter where customers live:

• It's colder this winter. Last winter was the ninth warmest in the United States since record-keeping began in 1895, according to The Weather Channel, and the warmest on record for the Northeast. Lower temperatures this year are leading to increased demand. Forecasters anticipate lower temperatures to continue in coming weeks.

• Oil prices are higher. Prices have been rising for months because of a general strike in Venezuela and concerns about what will happen to oil supplies if the United States goes to war against Iraq. Because natural gas can often be used in place of oil, especially in industry, a rise in oil prices usually translates into higher natural gas prices.

• Prices are also up for other forms of energy. The EIA estimates winter heating bills will be up 43 percent for heating oil customers, 20 percent for propane and 12 percent for electricity this year. Despite the gain, prices are not expected to come close to winter 2000-01, when costs rose to the highest in more than a decade.