Increased energy costs a concern as winter approaches

The cost to heat a home with natural gas could increase by 15 percent.

Jason Juno

Whether heating a house or an entire university, many will feel the effects of increasing energy costs this winter.

The cost of energy is a concern for students and University officials, but the good news comes from the National Oceanic and Atmospheric Administration, which predicts a warmer-than-average winter in the Upper Midwest.

National numbers

The cost to heat a home with natural gas will increase approximately 15 percent in the Upper Midwest, predicts the Energy Information Administration, which is part of the Department of Energy, economist Neil Gamson said.

The energy administration predicts an 11 percent increase in natural gas prices and a 3.7 percent increase in Upper-Midwest use.

Most Minnesotans use natural gas, Minnesota Department of Commerce spokesman Bruce Gordon said. The increase translates to approximately a $45 increase on a $300 bill.

From two years ago to last winter, prices increased 16 percent and 13 percent the period before that, Gamson said.

“Gas prices have been going up,” he said. “It’s that simple.”

Heating-oil prices are projected to go up approximately 29 percent, Gamson said. Propane prices are expected to go up approximately 21 percent this year, including consumption, according to this year’s Winter Fuels Outlook report. The figure is compared to last year’s propane increase, which was 8 percent, Gamson said.

A very cold winter in the Midwest could “certainly throw things way out of proportion” because it is such a large consumer, Gamson said. Chicago has high usage because of its large population, while Minneapolis has high consumption because it is one of the coldest of the large Midwest cities, he said.

Gordon said supply is above five-year norms in Minnesota, and demand is the uncertainty.

University facility costs

Facilities within the University also will feel the pinch as they use natural gas, coal, heating oil and wood.

The Minnesota Pollution Control Agency requires that the University use natural gas 70 percent of the time to heat buildings, research components, hot water and more, said Jerome Malmquist, director of Energy Management for Facilities Management.

The department is budgeted for 23 percent coal and 5 percent fuel oil. The Minnesota Pollution Control Agency allows the University to use a 30 percent combination of coal and fuel oil, Malmquist said.

Prices change quickly, Malmquist said – sometimes hourly. Although budgeted at $5.28 per unit of natural gas, the price was at $8 Tuesday afternoon, he said.

Facilities Management’s 2005 budget was thought to be created with plenty of leeway, but the higher prices will probably put the department over its original budget, said Michael Nagel, assistant director for Energy Management.

The budget for utilities -which include more than just heating – has increased in recent years because of higher energy prices and new buildings on campus, Malmquist said. The budget increased 5.5 percent from fiscal year 2004 to fiscal year 2005, he said.

When Minnegasco – the system through which the University uses its natural gas – runs out of resources, the University has a backup plan.

The backup plan is fuel oil. The University has 1 million gallons of fuel oil stored, which it bought for a lower price than it budgeted for, Nagel said. The University uses approximately 1 million to 1.5 million gallons in one year, he said.

That means when the company cannot get gas to the University, the University must use the fuel oil. That happened 28 days last winter, Malmquist said.

Another part of the problem is that the price of natural gas never decreased as it normally does every summer. Thus, supplies could not be purchased at a lower price.

The University will use its option to burn coal when the price of gas is at its highest, which comes during the winter heating season, said Jenn Rowe, communications specialist for Facilities Management.

A warmer winter

Weather is a big factor in how much energy is used, Malmquist said.

Minnesota should expect a warmer, drier winter than normal if National Oceanic and Atmospheric Administration predictions are correct, said Craig Edwards, chief meteorologist at the National Weather Service in Chanhassen, Minn.

But, Edwards said, the weather service does not predict exactly how much warmer than average seasons will be – for instance, this winter might be only slightly warmer than average, or it could be significantly above average.

The service has also predicted there will be less snowfall than average this winter but not how much less.

A “weak to moderate” El Nino in the Pacific Ocean usually causes these conditions in the upper Midwest, Edwards said.

Such long-term forecasts can go either way. Predictions pointed to the summer being cooler than normal, which it was, Edwards said. However, in August, the oceanic and atmospheric administration predicted a cooler-than-average September, but the month was 6 degrees warmer than normal, he said.