Posted: July 23, 2008
Merrill Lynch’s North American economist, David A. Rosenberg, issued a warning Monday that a “brutal winter (is) coming for utility bills.”
Rosenberg wrote in his Morning Market Memo, “Last winter, the average price of natural gas on the NYMEX was $7.71 per btu – it is now $13, a 67% jump. And about half of US households (54 million) heat with nat gas. Meanwhile, those that rely on heating oil are likely to face prices around 5 dollars a gallon, which would represent a 72% hike from last winter.” Close to eight million U.S. households use heating oil, most in the Northeast and Mid-Atlantic.
“This is going to be huge,” Rosenberg wrote. As it stands, he noted, “in states like New York, shutoffs of utilities services for households in arrears on their bills were up 41% through April.”
While utilities are prevented from turning off services during winter months, that doesn’t mean Americans who have had service turned off won’t try to stick it out anyway. Legislators in many New England states are already holding urgent meetings on how to help people expected to face food vs. fuel crises this winter.
“The federal government is going to have to step in and heavily subsidize this winter,” Mark Wolfe, executive director of the National Energy Assistance Directors’ Association, told EnergyTechStocks.com last month. NAEDA represents the state directors of the federal government’s Low Income Home Energy Assistance Program (LIHEAP). President Bush cut LIHEAP funding and, despite experts’ dire warnings, the U.S. may enter the winter heating season with less money available to help people than last year.
For more on LIHEAP and the growing risk of a heating season disaster in the U.S., see America’s Energy Nightmare About to Get Worse – Millions More will Need Billions More in Heating Oil Subsidies (Part 2 of 4).