By Jacob Geiger
Consumers hurting at the gas pump and grocery store might want to brace for the next bit of bad news: Heating bills are going up - a lot.
The 260,000 Hampton Roads customers of Virginia Natural Gas will see - on average - a 35 percent increase in their annual bill over last year, the company said Tuesday.
The July 1 increase represents the fourth this year and is the largest. The biggest increases over the next year will come in the months of heaviest gas use. Collectively, a bill that would have cost $191 in February - representing the average use for a Virginia Natural Gas customer that month - would run $278 under the new rate.
The rising cost of corn has driven up food prices, and ongoing flooding in the Midwest could make things worse. While the per-gallon price of gasoline seems to have stabilized in Hampton Roads, the average price of $3.919 on Tuesday is about $1.09 more than it was a year ago, according to the AAA Web site.
The Virginia Natural Gas increase came because the price of natural gas is approaching levels not seen since Hurricanes Katrina and Rita hit the Gulf Coast in 2005.
But unlike those price spikes, there's no sign these increases will go away anytime soon, said Ann Chamberlain, the company's manager of gas supply. That means customers should brace for high heating bills this winter, she warned.
To obtain natural gas, the utility is paying $12 to $13 per million BTUs, up from $7 to $8 last summer, she said. BTUs, or British thermal units, are used to measure units of energy.
Natural gas typically is less expensive in the summer because demand is lower, allowing providers to stockpile cheap gas that is then used to partially offset high winter prices. But Chamberlain said less is being stored this year, and the high price of gas over the summer means that the savings won't be as pronounced come winter.
Chamberlain said she has never seen price increases like this during her 30 years in the business and can't explain why prices are so high.
"It doesn't seem to be a supply issue," she said. "I believe speculative trading may be having a large impact, but I can't tell you for sure."
The cost of gas makes up 70 percent of an average customer's bill, with administrative and distribution costs accounting for most of the rest. Natural gas providers typically seek quarterly adjustments to their gas supply costs. The companies then pass that on to customers with no profit. The sharply rising gas prices have forced the utility to raise rates four times in the past six months.
For customers, the cost of 100 cubic feet of gas, a unit known as a therm, will have increased from $1.01 in January to $1.65 starting July 1. The average use for a customer is 11 therms in July but more than 100 in February.
Mike Rose, trading director of Angus Jackson Inc. in Fort Lauderdale, Fla., said natural gas prices are rising now because higher oil prices drive up demand for natural gas.
"You have power plants that can switch from oil to natural gas," Rose said. "Now it's become prudent to power up for natural gas. The minute crude sells off and prices drop, I think natural gas will, too."
Rose said any hurricanes that hit the Gulf Coast this summer could send natural gas prices shooting up further, perhaps to the range of $14 to $16 per million BTUs.
In Hampton Roads, the state government and nonprofit groups provide help for residents to prepare for higher bills that will arrive this winter.
The Virginia Department of Social Services will take applications for assistance with heating bills at local DSS offices and on its Web site, www.dss.state.va.us, between Oct. 14 and Nov. 14.
The Southeastern Tidewater Opportunity Project - a nonprofit - refits about 300 homes a year at no charge through its weatherization assistance program. To qualify, a single-person household must have an income below $15,000. Multiple-person households are eligible if total income is less than $15,000 plus $5,400 for each additional person in the house.
Improvements include placing weather-stripping under doors, repairing furnaces and hot water heaters, and adding insulation to attics. The improvements would normally cost about $3,000 per house, said Glennis Johnson, the assistant program administrator. Those interested in applying may call (757) 858-1397.
"This time of year people aren't calling," Johnson said, "but this is a good time to get our help."
Jacob Geiger, (757) 446-2643, jacob.geiger@pilotonline.com
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Look at prices in gold
Look at the price of oil in gold. 30's, 70's, today. Maybe the US dollar just isn't worth much.
Phrog
To blame the dems for the increase in gas prices is foolish. Fine, the dems took control in '06 (although I wouldn't consider the election a "hostile takeover"), the majority is razor-thin, and is not enough to garner the votes to enact many of the policies they proposed. Funny how I don't see reports blaming higher oil prices on dems, but on "supply and demand", international fears and pressures, weakened dollar, etc. To blame the democrats for the increased price of oil and gas is akin to putting one's head in the sand. And to blame them for mismanagement is laughable, given the government's response to Katrina, Afghanistan, and Iraq. Those situations were handled so well. Oh, and the economy, which the republicans patted themselves on the back for, since house ownership was on an unprecedented rise (remember the interviews) only to have the rug pulled from under it because of poor lending practices.
The Dems are the ones responsible.
AM81430, I believe that the point that DAPARM was trying to make is that since the dems have wrestled control of our governments from the repubs fuel prices have steadily increased. Yes, the price was $2.19 in January 2006 when they took power. The promise from those dems was that they would ensure they would control the oil prices. They sure have controlled the prices…right into their own wallets while we, the hard working Americans are getting blistered by the rising costs. Both the dems and the repubs are responsible. But I hold the dems far more accountable because of their foolish mismanaging ways. The dems USED to be the party looking out for the little guy. That party is long gone. All they want now is the absolute power and they are choking that power out of us with oil and natural gas.
Facts are facts and you can't dispute them when you see how this economy has turned since the Dem hostile take over in 2006.
Speculators...
So if this is all the fault of speculators then logic says their game will eventually run out and they will have to move on to another market.
So which market will be next to skyrocket? Will it be staples (food). I'm sorry I don't buy all the talk of speculators as the cause of these astronomical prices. Just like I don't believe Big Oil is using their windfall profits for new technology. It really looks like a redistribution of wealth... again.
DAPARM
I don't know where you get your figures from, but gas was about $3/gal in 2006, not $2.19. It might have started at $2.19 in January, but by the summer, gas was priced at a national average of about $3/gal.
Don I also think
that speculation is to blame as well. I read a report that Morgan Stanley is one of the biggest owners of natural gas in the North East. I can't remember where I heard that, but I will try to find it.
Natural Gas is not crude oil
Our ability to store natural gas is very limited. It is mostly used as it is produced. Storing natural gas requires compressing it, or even liquefication, which is expensive.
However, it is safe to say that it would be cheaper here if it were being piped in from off the Virginia shore than being brought in by pipeline from hundreds of miles away.
If you want to bring the price down, then drill here.
Supply
The rep from VNG in one paragraph says about the natural gas supplies "less is being stored this year"
Then she goes on to say "It doesn't seem to be a supply issue"
I'm not an expert, but please explain how less supply, is not a supply issue in the cost.
Eye Roll
Wow...just wow. Do you people really believe all that silly conspiracy theory crap?
Wow. This deems repeating.
Submitted by fast500 on Tue, 06/24/2008 at 10:24 pm.
This is the bottom line folks. I'm waiting to hear someone say this isn't true. What fuel and natural gas shotage? It's long but well worth it!! This is a scam to soak the heck out of America...demand answers from our leaders.
Watch and wait to be amazed.
http://www.youtube.com/watch?v=NbakN7SLdbk
paulm ...
PaulM, to be fair the tech bubble started while Clinton is in office. The rich are looking for ways to make lots of money while inflation is killing the savings of the working class (those that have it). Any bailout of housing from the gov't isn't a bailout of the working class, it's a move to bail out the banks that ignored the fundamentals of lending.
Another good reason
Another good reason to spend the extra money on a dual fuel gas/electric furnace. Use the heat pump most of the time and then fire up the gas for the few times it gets really cold. I've seen a number of gas furnaces getting replaced around the neighborhood.
AMUSING
Rock boy, the Dems have been in charge of Congress since 2006. D.E., who wants to give stuff away for free outside of our current welfare program. Talk about needing to do research. In just one year. Remember the election in 2006? Thought you might like to read the following: A little over one year ago: 1) Consumer confidence stood at a 2 1/2 year high; 2) Regular gasoline sold for $2.19 a gallon; 3) The unemployment rate was 4.5%. Since voting in a Democratic Congress in 2006 we have seen: 1) Consumer confidence plummet; 2) The cost of regular gasoline soar to over $3.50 a gallon; 3) Unemployment is up to 5% (a 10% increase); 4) American households have seen $2.3 trillion in equity value evaporate (stock and mutual fund losses); 5) Americans have seen their home equity drop by $1.2 trillion dollars; 6) 1% of American homes are in foreclosure. America voted for change in 2006, and we got it! Remember its Congress that makes law not the President. He has to work with what's handed to him.
Alternative Looking Good.
With the price of oil, natural gas, propane, electrical power all rising the 15 oak trees in my yard are starting to look good as a substitute heating fuel. With a little labor on my part and cutting down one a year, I figure I can stay warm for the next 15 years.
Speculators are key
Chamberlain said she can’t explain why prices are so high. She said she’s never seen price increases like this during the 30 years she’s been in the business.
“It doesn’t seem to be a supply issue,” she said. “I believe speculative trading may be having a large impact, but I can’t tell you for sure.”
Exactly. Speculators again and I demand that my government do something about this! Email the White House, your governor, and other states Gov. Email addresses are on the web, just send them out! This is crazy! Why are our elected officials sitting back and allowing these people to crumple the very economy of our country? Have we allowed our elected officials to become so cowardly that they can't or won't take steps to protect the greater population? These speculators are no better than economic terrorists. Where the heck is 'homeland security' when it comes to our everyday lives and our ability to get to work, keep our families warm, and to take care of our elderly that live on fixed incomes? I'm really starting to think they are worthless.
Interesting changes have
Interesting changes have occured the past seven years with a president and vice president who have longstanding deep involvement with energy in the Whitehouse...
No surprise
Joanie quoted Robert Shiller! AWESOME! Others have said it. You know that Senator Dodd, who helped draft a $300 billion taxpayer bailout for "homeowners" (their lenders) just got busted getting favors from Countrywide Mortage? It's kind of illegal, but nothing big is being done. The American consumer is already living on debt, according to the savings rates over the past few years. Energy costs are going to further murder consumer spending, which is a large part of GDP. Just remember that Rome was once great and fell too.
THIS MAY BE WORTH YOUR TIME
Please search on your browser for Lindsey Williams and watch the video. This may answer a lot of your questions.
A must see...how do the national media ignore this?
;-)
I spell out what many politicians are constantly spouting.......and I get more outrage than the politicians do. Political contests are nothing more than American Idol contests with more voters to vote in the candidate that looks the best, dresses the best, wows 'em the best with promises that will never be kept. Most of the promises are nothing more than the ol' Marxist philosophy of from the wealthy to the needy. Where do they think all this money will come from? You guessed it. My family is working harder than ever ( 3 incomes) and we are getting farther behind than ever. I could have really used that 10k stolen from me in the form of taxes last year (FICA, property, everything combined!)
Stocks up, price gouging non-existant.
First, we get the news that Dominion's going to bend us over on the power bills, because they're just not making enough money for the stock holders. Now it's the gas bills, because they seriously need to keep the stocks up.
It's so awesome that the state and the various oversight committees don't see anything wrong with this. Federal stimulus to try and get us to spend more money? HOW when the cost of living keeps exceeding the amount of income and stimulus?