Natural gas heating is likely to be cheapest

ECONOMIC NAVIGATION & SIGHTSEEING

Blogging Biz

November 25, 2007|By JAY HANCOCK

Pre-winter energy update:

The cost of heating oil is way up, along with the cost of crude and gasoline. The cost of natural gas is comparatively lower. And the wholesale cost of electricity is down, too, though it won't do you any good. BGE has locked into (higher) winter prices already, and, unlike last year, nobody is offering to undercut BGE's standard price and pass along the favorable wholesale prices.

This year, those who heat their homes with natural gas are likely to be better off than people depending on oil furnaces or electric heat.

Floyd Norris wrote recently in The New York Times: "A result is that those who heat their homes with natural gas - by far the dominant heating fuel in the United States - will see prices roughly in line with last winter's. But for those who use heating oil, as many do in the Northeast, prices seem likely to be about 50 percent higher than they were last winter."

Even though natural gas prices are higher overseas, importing supplies into the U.S. by liquefying them and pumping them into tankers is very expensive, wiping out any potential profit. And even though U.S. gas prices are more affordable than oil these days, few people will buy gas furnaces for that reason alone.

BGE's natural gas price (not counting delivery) for November is 92 cents per therm: 28 percent higher than last year's November price but 44 percent lower than 2005's November price.

Wholesale electricity prices on the Mid-Atlantic grid are down sharply. Juice for December delivery is down 33 percent from its price over the summer. But no company I'm aware of is aggressively taking these lower prices and offering to pass them onto BGE customers.

I assume this is because competitive retailers are waiting to see what the Maryland legislature does in next year's session. They want the General Assembly to make it easier for rivals to reach BGE customers, and they're also afraid legislators may re-regulate the electricity market. So they don't want to invest a lot of money in marketing campaigns until they know what the landscape looks like.

Heating oil, meanwhile, has soared - up 70 percent since late 2006 and 25 percent since August.

jay.hancock@baltsun.com

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