Fuel prices could make for expensive winter

Associated Press

MINNEAPOLIS -- Natural gas prices remain much higher than normal for this time of year, triggering fears that short supplies could stifle the national economy and increase the cost of heating homes in Minnesota.

Many Twin Cities consumers will start seeing the effect of the high prices next month, said Joe Klenken, regulatory specialist for CenterPoint Energy Minnegasco, Minnesota's largest natural gas distributor.

Klenken said Minnegasco customers who pay according to a "budget plan" that spreads the high, cold-weather heating bills over 12 months will be getting bills about 25 percent higher this year than last.

"Supply and demand has been in a very tight situation for the past six to seven months," Klenken said.


Although Minnesota had relatively normal winter weather, much of the country, particularly the heavily populated East Coast, saw much colder-than-usual weather.

"It's a national market, and the East Coast really had a big effect on supplies," he said. "There were heavy (natural gas) withdrawals from storage last winter and inventories were very low -- way behind the five-year average. And so far production hasn't caught up with demand as well as we would have liked."

Xcel Energy spokesman Ed Legge said July prices for the utility's Minnesota residential customers are down slightly from last month but up more than 36 percent from a year ago. He said one reason for the recent lower prices is that many industrial users of natural gas are shutting down because of high costs, thus trimming demand.

However, Klenken said any of several factors could send prices up again: an increase in U.S. industrial activity; hot summer weather in Texas, Florida or California, which are heavy users of natural gas to produce peak-load electricity when air conditioner use is high; and hurricanes that disrupt drilling in the Gulf of Mexico and hurt supplies.

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