Money to burn? Natural gas prices heat up

Hurricane Katrina directly affected the lives of dozens of Charlottesville residents. This winter, it could upset thousands.

According to Charlottesville utilities advisor Bill Dyer, the cost of natural gas locally– as well as across the nation– will skyrocket as soon as the weather turns cold. The reason? Katrina's destruction along the Gulf of Mexico. Many gas production platforms and gas processing facilities were damaged, while some were completely demolished.

"The American Gas Association is telling everybody, nationwide, that because of the hurricane, drilling is down, production is down," says Dyer. "And the first rule of Economics tells you that when demand for something like natural gas is high, it'll drive the prices up."

Way up.

"I've never seen prices reach the level the American Gas Association is telling us to anticipate," says Dyer, who's worked in utilities for the past 21 years. "I am extremely concerned about the rates of natural gas this winter."

Dyer was unable to offer an estimated cost increase "because it's all dependent on what the weather's going to do," he says. However, the federal government issued its dramatic assessment last month. The Energy Information Administration said consumers in the South who heat with natural gas will likely spend $1,038 staying warm this winter– a 56 percent jump.

The city has been trying to prepare for the worst with its Gas Assistance Program, which provides supplemental payments to customers of the city's gas utility whose cost of home energy is excessive in relation to their income. Despite the city's foresight, Dyer is worried that this year's GAP funds may not be enough.

"We take applicants year-round for the program, and this year there's been an unprecedented demand," he says.

So GAP has recently begun asking its applicants to first sign up for the statewide energy assistance program run through Virginia's Department of Social Services.

"We're not trying to turn people away," Dyer says, "but because of limited Gas Assistance Program funds, we want people to turn to the state for aid as well. Also, GAP is only able to aid people who heat with Charlottesville's natural gas. State assistance covers all heat sources, even things like firewood."

Charlottesville's GAP is funded in part by an annual grant given by the city, but is largely dependant on donations, which have become even more vital to the program in the past couple of months.

"We implemented a new bill format in July, so that for every bill that's mailed out, there's a space to make a GAP donation," says Dyer. "It's been extremely beneficial. We've had a 25-30 percent increase in donations."

While that's impressive, Dyer says, he'd like to see even more, especially since there's no guarantee that the city will continue to help fund the program every year.

"We can't totally rely on the city. We certainly ask for the grant for it every year, and it's been forthcoming in the past few years," he says. "But we'd like to expand GAP's donor base. If everyone donated a few dollars, we could do this thing."

You won't have to own one of these to spend big money on heating this winter