Americans should brace for sharply higher heating bills this winter in the wake of Hurricane Katrina.
Households that use natural gas will see heating costs leap by 71 percent this winter, while users of heating oil will see an increase of 31 percent, the U.S. Energy Information Administration said Wednesday. Homes that use electricity for winter heating can expect a 17 percent increase from last year.
Katrina’s disruption of an already-tight oil and natural gas market will push total 2005 U.S. energy expenditures to $1.03 trillion, up 18 percent from 2004, the EIA said.
Although oil and natural gas prices will ease somewhat from the record highs hit immediately after Katrina slammed into Louisiana and Mississippi, prices will remain high compared to last year.
“Dramatic increases in domestic energy costs, assisted by everything from tight world oil markets, to blistering summer heat, to the ravages of Hurricane Katrina, have made for an exasperating summer for many consumers and have set the stage for a potentially expensive winter heating season beginning a month or two from now,” the EIA said.
Higher energy prices will eat up the biggest percentage share of the nation’s gross domestic product in nearly 20 years, the government said.
“This level of expenditures represents approximately 8.3 percent of annual gross domestic product, compared to 6.2 percent as recently as 2002, and is the highest percentage since 1987,” the EIA said.
“Expenditure increases for natural gas are expected to be particularly strong in the East North Central region of Ohio, Indiana, Illinois, Michigan and Wisconsin because of expected higher heating-related demand in comparison to the relatively mild conditions seen last year,” the EIA said.
Natural gas prices paid by consumers to heat their homes will rise to a forecast $16.08 per thousand cubic feet (mcf) in the fourth quarter of 2005, then peak at $16.37 per mcf in the first quarter of 2006, the EIA said.
By comparison, the natural gas price for residential heating was $9.82 per mcf in the first quarter of 2004.
Electric utilities, which are major users of natural gas to fuel their plants, also face steeper energy costs.
In the fourth quarter, utilities will pay an average $11.42 per million Btu for natural gas, nearly twice as much as the same quarter of 2004.
The government forecast also said U.S. crude oil prices, which briefly soared to a record $70.85 a barrel after Katrina struck the Gulf Coast last week, will remain above $62 a barrel for the rest of 2005 and into 2006.
By Wednesday, eight U.S. refineries damaged by Katrina had returned to full operations, and another one was operating at two-thirds capacity. Production of crude oil and natural gas in the Gulf of Mexico was also gradually returning to normal levels.
