Home Heating Costs to Soar this Winter

     Americans can expect home heating prices to jump as much as 44%
this winter because of strong economic growth and high crude oil
prices, according to the EIA. A winter with especially long periods
of cold weather' could cause even higher prices because heating fuel
storage levels are below average. Homes that use natural gas can
expect to see the biggest jump in bills. Prices paid by residential
customers are expected to average $8.58 per MMBtu, up about 30% from
last winter's average of $6.61. The higher prices, combined with
increased consumption, will push overall costs up to an average $780
this winter from $540 last year earlier, the EIA said in an annual 
report on winter fuels. High prices for competing petroleum-based
fuels will help keep natural gas prices high. Homes with heating oil
will pay about $949 for fuel this winter, up 25% from the $760  paid
last winter. Prices will average about $1.37 per gallon, up 16% from
last year's $1.18, the report said. The 4.5% of Americans who use
propane to heat their homes will pay about 27% more this winter at
$1,045, compared with $823 last year. Inventories of propane at the
end of last month were about 62 million barrels, 3 million above last
year's level. Distillate stockpiles, which include heating oil and
diesel fuel, will be about 114 million to 118 million barrels at the
start of the heating season, about 15% to 18% lower than last year,
the report said. The government projection excludes the heating oil
reserve created by the Clinton administration, which stores 2 million
barrels. Distillate stocks in the East Coast are 41 million barrels,
close to 40% less than last year's level. In New England stocks are
over 60% below the 1999 level. The EIA estimated the monthly price of
crude oil will remain above $28 per barrel for the rest of the year,
and then gradually decline next year to an average $25 per barrel.
Because of rising demand in Asia and continued growth in the US,
higher oil production by OPEC has not been able to stem the rally in
prices, the report said. US crude oil inventories are about 287
million barrels, 17 million barrels below last year. The deficit is
smaller than last month, when there was a 26 million-barrel
shortfall, though supplies are still 8% below normal and are not
expected to move into the normal range before the end of winter, the
report said.  Global oil demand this year is expected to increase 1.1
million barrels per day from last year and will grow by an additional
2 million barrels a day in 2001 to 78 million barrels a day,
according to the report. The average retail price for gasoline, which
was about $1.52 per gallon last week, will fall to about $1.46 per
gallon in December and $1.40 by next March, the report said. The
report says a very cold winter could cause Northeast heating oil
prices to surge, and that could spill over into East Coast diesel
markets. The government said the chances of this were greater this
year because of tight distillate supplies, especially in the
Northeast. Diesel prices will fall by about $0.09 to $1.55 per gallon
in December and $1.35 by next summer, assuming normal conditions this
winter.