) Sequoia sport-utility vehicle in recent months. But that didn't make it any easier for Sugarman to face yet another round of sticker shock: filling the heating-oil tanks at his three-bedroom house. At $1.54 a gallon, the cost was more than 50% higher than he paid last year. Says Sugarman: "I don't like it, but I don't have any control."
The story is the same all around the country. From natural gas and propane to heating oil and gasoline, prices are on the rise. Even in regions where a milder winter is expected to ease demand, higher prices are expected to push up household fuel bills. The federal Energy Information Administration figures that the average household will spend from 15% to 28% more to heat its home this winter. A colder-than-expected season could further widen those increases.
It's not just near-record crude oil prices, now about $53 a barrel, that are putting the squeeze on household energy bills. Tight inventories are also adding to the pressure on heating oil, used mostly in the Northeast. Senior analyst L. Bruce Lanni of A.G. Edwards & Sons Inc. (AGE
) figures that distillate inventories, which include heating oil and diesel fuel, are down 6% from year-ago levels and 3% below average. And the fourth quarter is typically a period in which inventories are drawn down, not built up, because of high demand and refinery maintenance. Lower-than-average supplies coupled with a cold winter could lead to price spikes in the Northeast, warns analyst Dominick A. Chirichella of the Energy Management Institute of New York, a consulting company. His advice: "Buy some heavy sweaters."
Gasoline inventories are in healthier shape. But unless crude oil prices fall near $40 a barrel, analysts believe consumers could see higher prices at the pump. Gasoline prices as of Oct. 11 averaged about $1.99 a gallon nationwide, below their peak in May but up 8% from a month ago. "It's almost amazing that we still see gas at under $2 a gallon in a lot of areas," says Gene Edwards, senior vice-president at refining company Valero Energy Corp. (VLO
Natural gas users won't be spared this winter, either. The Energy Information Administration predicts that average residential natural gas prices will rise 11% over last winter and household spending 15% because of higher consumption. Worse yet, rising demand and tight supplies suggest that higher gas prices are here to stay. Mark G. Papa, chief executive of independent oil and gas producer EOG Resources Inc. (EOG
), estimates U.S. demand for natural gas will grow by 1.7 billion cubic feet a day next year for electricity generation, residential heating, and other uses. At the same time, supplies will shrink. "We're not going to be able to drill our way out of this," says Papa.
Better grab that sweater. Consumers are about to get hit with some awfully big energy bills this winter -- and perhaps beyond. By Wendy Zellner in Dallas, with William C. Symonds in Boston