By Myrna Trauntvein
Times-News Correspondent
Nephi City natural gas rates are expected to increase
by approximately 50 percent over last year's winter
rates.
All Nephi utility users received a notice in the same
envelope with October's utility bill warning that rates are
expected to increase.
"Largely due to damage caused in the Gulf of Mexico by
recent hurricanes, "Katrina" and "Rita," wholesale natural
gas prices, as well as heating oil, propane and electricity,
have risen sharply for the coming heating season
nationwide," said, Tony Ferguson, superintendent of the
Nephi City Gas Department.
U.S. consumers could face bills averaging 50 percent
higher this season than last year, according to predictions
by the economic research firm Global Insight Inc.
Manufacturers who use huge amounts of natural gas are
scouring the world for cheaper prices and considering moving
operations to ease their costs. A renewed exodus to overseas
could further damage growth in the United States and boost
unemployment.
According to government data, U.S. natural gas prices
are among the highest in the world. Though the United States
imports some natural gas, most is produced domestically.
However, domestic supplies have failed to keep pace with
demand.
Power plants have increasingly turned to natural gas
for fuel over the past decade because it is cleaner-burning
than coal. In addition, it is more efficient than coal.
About 17 percent of the country's electricity is
generated by natural gas, according to government data.
Natural gas accounts for about 63 percent of energy consumed
in U.S. households. The fuel heats 55 percent of the
country's homes.
U.S. natural gas prices have been edging higher for
years but shot up sharply in recent weeks because of
hurricanes Rita and Katrina, which damaged production in the
Gulf of Mexico along with onshore processing facilities.
Imports are not able to make up for the lost supplies
because not enough liquefied natural gas is available. Too
few ships and terminals exist to handle a significant
increase in imports.
Domestic production, which has been flat in recent
years, cannot be quickly increased without significantly
more drilling, analysts said.
"Prices are expected to nearly double what they were
last winter," said Randy McKnight, city administrator.
The price increase is likely to squeeze consumers. But
there are some things that can be done to help lower home
heating costs.
"You may want to consider taking steps to conserve
energy this winter," said Ferguson.
He suggested setting the thermostat at 68 degrees,
using a setback thermostat, making sure the home is
adequately insulated, and sealing air leaks around doors and
windows.
The cost to heat homes with natural gas could increase
even more than the expected 50 percent, according to Global
Insight in Lexington, Mass., if the winter is unusually cold
and demand increases.
The price of natural gas for November delivery closed
at $13.38 per million British thermal units (Btu) Friday on
the New York Mercantile Exchange.
That was up 90 percent from a year ago. Analysts
expect prices to fall somewhat after hurricane-related
repairs are completed in the Gulf.
Unlike crude oil, whose price is set on a world
market, natural gas prices are set in local markets. In
countries where supplies are abundant, prices tend to be
lower.
Rising prices are generating concern on Capitol Hill
and are increasing pressure on lawmakers to open drilling
areas that are now off limits. A measure approved by the
House Resources Committee last week would allow drilling for
natural gas offshore on the Outer Continental Shelf.
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