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It’s not even the season for their use, but already the prices for home heating oil and natural gas have analysts worried about the winter.
Major price hikes in the cost of gasoline, heating oil and natural gas made for a 6.6 percent bump in energy costs in June, according to the U.S. Labor Department; however, when oil dropped $6 a barrel Tuesday and another $4 Wednesday, futures for gasoline, natural gas and heating oil also dropped.
“Certainly if you look at what’s going on with wholesale natural gas - prices this summer have been significantly higher than last year - there will be some fairly expensive natural gas this winter,” said Andrew Melnykovych, spokesman for the Kentucky Public Service Commission.
The price this year doesn’t seem to be strictly dictated by supply and demand as in previous years. Market forces that include increased institutional investment (by pension plans, universities and others) in all commodities appear to be in play, Melnykovych said.
The home heating oil industry is predicting prices might double this winter.
Heating oil, used mostly on the East Coast, and natural gas have two completely different sources - heating oil comes from crude that is mostly imported and natural gas comes mostly from U.S. exploration - but the rise for oil is somewhat of an indicator of what natural gas might do.
“Energy prices tend to rise and fall in tandem,” he said.
At the end of this month, the state will learn what four of the five major gas utilities, including Atmos Energy, will ask for their gas delivery cost adjustment.
“The picture isn’t completely clear at this point and we are certainly monitoring the situation very closely,” Melnykovych said. “I’m afraid there is not much good news there; it will potentially be a fairly challenging winter if we get a lot of extreme cold weather.”
That has Ellie Harbaugh, associate director of Community Action of Southern Kentucky, worried.
Harbaugh said her agency is already receiving numerous calls for help with cooling bills and expects calls for heating help in the winter to be higher than ever.
“A receptionist at one office said she is getting anywhere from 20 to 30 calls a day requesting assistance with food, utilities or housing stability,” Harbaugh said.
Between August and the middle of February, the agency distributed about $1.3 million in various aspects of the energy assistance program. That included help to 2,588 families with summer cooling, 4,149 in the crisis heating component (those in immediate danger or who have had utilities cut off) and 6,428 people seeking a subsidy for their utility bills.
“Winter will be a very busy time for us,” she said. “People are faced with a lot of economic stressors and I don’t think it is going to decrease.”
Both Harbaugh and Melnykovych are urging residents to start doing things now that can save them energy later.
“We still have the weatherization program now, but there is a waiting list,” Harbaugh said.
Even without that formal program there probably are small things that some residents can do, such as caulking around windows and doors and using draperies both to help block out heat in the summer and retain heat in the winter.
“If your utility does budget billing, sign up now,” Melnykovych said.
Harbaugh said residents, in general, should be making plans in their overall household budget for heavy heating bills.
Even those who use electric can probably expect higher prices this winter at least in the fuel cost adjustment that is added by the Tennessee Valley Authority, according to Mark Iverson, general manager of Bowling Green Municipal Utilities.
While most of TVA’s energy is generated from coal, it also uses nuclear power and hydro power and natural gas is used to power turbines. So a rise in natural gas somewhat impacts the cost of delivering fuel.
“Spot prices for coal have doubled in the last eight months ... that can’t help but get reflected in the cost,” Iverson said.
Also impacting TVA costs is the fact that much of its service area is still experiencing a drought, making it hard to use hydro power for the generation of electricity.
“Long term, it is going to be difficult for a lot of people,” Harbaugh said. “Many are facing difficult times with gasoline at $4 a gallon and the rising cost of food but they are living on the same budget.
“We are not just talking about low income; it’s affecting the middle class as well.”
— For tips on how to save energy or find energy assistance, go to www.energy.ky.gov/dre3/tips.





