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In New Jersey, Colder Winter Could Push Home Heating Costs Higher

Tom Johnson | October 11, 2012

But even with below normal temperatures, NJ homeowners could pay less than residents of other states.

Snow in Summit

It looks as if some New Jersey residents may have to dig deeper into their pockets this winter to pay their energy bills.

The United States winter heating outlook projects that the coming season will be about 18 percent colder than last year, a prediction that the Energy Information Administration says will boost natural gas heating bills, as well as the cost of home heating oil, electricity, and propane.

For households that rely on home heating oil, the agency, an arm of the U.S. Department of Energy, estimated that the average expenditure for the fuel could reach record levels.

The bills for heating a home with natural gas this winter (October through March) are expected to be up nearly 14 percent; heating oil, up 17 percent; electricity, up 8 percent; and propane, up 17 percent -- according to EIA’s Short-Term Energy and Winter Fuels Outlook for the 2012-2013.

In New Jersey, where more than three-quarters of homes are heated by natural gas, the outlook is not as bleak. The state’s four gas utilities all are expecting a drop in utility bills, by as much as 3.6 percent in the case of Public Service Electric & Gas, which has 1.9 million customers.

Nationwide, the federal agency forecasts that natural gas prices will be 1 percent higher this winter.

The drop in natural gas prices has been spurred by increased production of the fuel in Pennsylvania and neighboring states, largely a result of the discovery of new supplies of the fuel in the Marcellus Shale formation there, according to Jorge Cardenas, vice president of asset management and centralized services for PSE&G.

Since January 2009, the utility’s residential customers have benefitted as the cost of natural gas has dropped about 39 percent, a decline, that has reduced residential gas bills by approximately $674 a year, according to PSE&G.

That trend may be coming to an end, according to EIA officials.

“The prices this year have been very low by the standards of the last 10 years,’’ said Jim Kendall, a natural gas analyst at the agency. “It gives an incentive to drillers to shut down their wells.’’

Tancred Lidderdale, another analyst at the EIA, agreed. “Because gas prices are so low, it’s a normal market response,’’ he said. “So prices are going to start to recover. It’s more of a small correction upward. They are still at historic lows.’’

One implication of that rise is that the agency is projecting an increase in electricity production from coal-fired power plants, which have seen natural gas supplement them as a big source of energy to keep the nation’s lights on.

Even with the historic low cost of natural gas, the agency estimated that the colder than normal winter will lead to high natural gas consumption, which could increase household expenditures for the fuel by as much as 21 percent.

Home heating also oil prices remain uncertain, primarily due to their dependence on crude oil prices. The price of crude oil is unusually high for this time of year, said Lidderdale.

The forecast drew criticism from energy industry officials.

Thomas Pyle, president of the Institute for Energy Research, blamed policies adopted by the Obama administration, which restrict access to North American energy resources.

“Consumers, primarily in the Northeast, who rely on home heating oil will see a record high of $3.81 per gallon this winter,’’ he said.

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