COLUMBIA — Higher worldwide demands for oil may mean higher home-heating costs for Missourians this winter.
If it seems that costs rise each year, it’s because that’s the case, said Kerry Cordray of the Missouri Department of Natural Resources’ Energy Center.
“That trend,” he said, “is unlikely to be reversed.”
The price increase is symptomatic of higher world demand for petroleum products. In China, India and other countries where economic growth is surging, countries are using millions more barrels of oil than they did just a few years ago.
However, “we can’t just blame (other countries),” Cordray says, because the U.S. is using more too.
Although the increase in price can be complicated by the fine details, Cordray said, in general, it’s a simple problem of stagnant supply and rising demand.
“The marketplace is chasing more gallons of fuel than there is fuel to be chased,” he said.
Increased propane costs are directly correlated with oil prices because propane is a by-product while natural gas costs tend to rise even though oil and natural gas are not directly linked.
“Costs of fossil fuels, in general, tend to ride a very similar kind of price curve,” Cordray said.
In Missouri, roughly 57 percent of households use natural gas for heat; 13 percent of homes are heated with propane.
Early reports from the Energy Information Administration speculate that for the winter season of Oct. 1 to March 31:
• Costs for heating with natural gas could increase by $78, a 10 percent increase from last winter.
• Costs for heating with propane could increase by $221, a 16 percent increase from last winter.
Predictions from AmerenUE, a natural gas provider that services roughly 34,000 customers in Columbia and another 5,000 in greater Boone County, state that prices could increase as little as $2.25 per month for the winter heating season, which AmerenUE considers November through March.
“We estimate that customers in central Missouri could see an increase in 3 percent over last winter,” assuming weather patterns are similar, said Mike Cleary, communications executive of AmerenUE.
Residential price predictions are made each year, though experts do not predict for commercial facilities, Cleary said. The average costs for heating a small apartment and a large house are more reliable and realistic than commercial average prices, which could encompass convenience stores and factories, he said.
According to the Energy Information Administration’s Nov. 26 update, propane costs $2.14 per gallon, up 50 cents from last year.
Steve Ahrens, the executive director of the Missouri Propane Gas Association, a nonprofit trade organization, said prices can vary above or below that average.
Ahrens said homeowners who use propane have the option to buy gallons in the summer, when rates are lower. He said the average Missouri household uses 985 gallons per year to heat their homes.
Year to year, independent of price increases, demand issues can arise if homeowners don’t maintain the recommended level of 20 percent propane in the tank.
“The issue will be if people are not able to keep their tanks at an appropriate level and we get cold weather, there could be a stress on the system,” Ahrens said. “Customers should be proactive in maintaining their propane supply.”
This hinders the company’s ability to deliver propane when it’s needed. When inventories are quickly depleted, the tightening of supply can result in higher costs.
Cordray cautions that predictions tend to be rough estimates, and residents may experience different increases.
Predictions are made with a lot of assumptions, he said, like average winter conditions. If this winter is colder, for example, costs could be higher.
Instead of predicting prices, Cordray said the Department of Natural Resource’s Energy Center reminds Missouri residents that reducing use can reduce costs. The Energy Center’s Web site has tips for homeowners.