Surging natural gas prices to greatly increase heating bills this winter

The surging costs have coincided with a robust recovery from the pandemic recession, with more homes and businesses burning all forms of fuel. That intensified demand is set to contribute to higher heating costs in many areas. Having enjoyed a extended period of low prices, consumers of natural gas are facing the burden of far more costly fuel — and the prospect of much more expensive heating bills this winter.

“Consumers got used to very low prices last year, because with the pandemic everything was shut down,” said Mark Wolfe, executive director of the National Energy Assistance Directors Association. “Now, everything’s coming back online, industry is returning and natural gas is being used again in very large quantities. And that’s pushing up the price.”

CenterPoint Energy consumers for the 2020-21 heating season (November-March), paid an average of $203.70, which reflects the gas commodity charges only, according to spokeswoman Alyssia Oshodi. After the immediate prior heating season (2019-20), it was the next lowest when compared to the previous four years, she said.

The electric and natural gas utility serves more than 1 million people in nearly two-thirds of Indiana and about 20% of Ohio, mostly counties in west-central Ohio, including the Dayton area. It recognizes that there’s been much concern recently about the rising market price of natural gas, Oshodi told this news outlet.

“Natural gas is a commodity bought and sold in a national deregulated market and prices fluctuate daily due to supply and demand pressures,” she said. “Supply and demand forces have been affecting the market price. While we can’t control the natural gas market or weather, customers can take steps that can assist in saving energy and money on their winter heating bills.”

Prices are spiking in the United States and analysts expect those prices to rise further through winter, when customers are most reliant on the fuel.

The main reason natural gas prices have jumped is that demand for fuel has accelerated as economies have recovered from the damage caused by the pandemic. But there’s another key factor too: There’s simply less gas on the market.

The factors that have diminished the supply are varied. When the pandemic was raging, oil prices tumbled and producers ran low on money to drill. Once they curtailed drilling for oil, they also retrieved less gas, because most wells pump both oil and gas out of the ground at the same time.

The wholesale price of natural gas in the U.S. has exceeded $5, up sharply from $2 to $3 during most of the past two years. That’s the highest price since 2014, though it’s well below levels reached in the 2000s, when prices surpassed $10 per million Btu.

Winter heating bills could be sharply higher. In the U.S., according to the National Energy Assistance Directors Association, natural gas bills could be as much as 30% more for consumers this winter, with the average cost to heat a home rising to $750, from $572 over the same months last winter.

Oil prices, too, have surged — to nearly $80 a barrel in Europe and $75 in the U.S. Just as with natural gas, a key reason is that producers sharply curtailed drilling during the pandemic. Another reason is that some power providers switch to burning oil for power generation if the price of natural gas goes too high, thereby increasing demand for oil and driving prices still higher. The cost to warm homes with heating oil or propane could surge 40%, according to NAEDA.

All of that could cause hardships for customers who were already struggling. The energy assistance association helped a record 1.2 million households pay their cooling bills over the summer — a level of aid up 46% from last year and the most in the program’s 40-year history. The increase was due in part to the higher temperatures that many experts have attributed to climate change.

The need for assistance through the winter will likely grow for low-income families, with federal unemployment aid having recently run out.

“The ending of unemployment, for those families, puts them at greater risk for all expenses, not just energy bills,” Wolfe said.

Oshodi said it’s important to remember bills will vary by customer depending on the size and age of the home, number of gas appliances, number in the household, thermostat settings and levels of insulation.

Customers are encouraged to implement energy efficiency measures and consider ways to use less natural gas to assist with lowering energy usage, she said.

The Public Utilities Commission of Ohio last month issued its Winter Reconnect Order for the upcoming winter heating season, a move that helps Ohioans served by PUCO-regulated utilities reconnect or maintain electric and natural gas service during the winter heating season between Oct. 18, 2021, through April 15, 2022.

Any residential customer of a PUCO-regulated electric or natural gas company may take advantage of the provisions contained in the order once per winter heating season. Under the Winter Reconnect Order, customers must pay the utility no more than $175 plus any applicable reconnection charge which cannot exceed $36. If the utility’s reconnect charge is greater than $36, the balance above $36 may be charged to customer on the customer’s next monthly bill.

More information about energy assistance programs and ways to save on home heating bills this winter is available at www.tinyurl.com/billassistance.

The Associated Press contributed to this report.

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Source: CenterPoint Energy