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Western New Yorkers this winter could see their natural gas bills increasing 15 to 20 percent over those of the last heating season.

Residents are already annoyed with higher prices at the gasoline pump from this summer, and now they can expect more of the same when heating bills arrive this winter.

The same market forces that sent automobile gas prices soaring have also lifted the price of home heating oil and natural gas. Residents who want to be thrifty this winter might want to start looking for a good sweater and some wool socks.

Energy analysts estimate the wholesale cost of both heating fuels will be 30 to 40 percent higher than last winter. However, that won't directly translate to a corresponding increase for consumers for a number of reasons, particularly in the case of natural gas, which heats most local homes.

At least half the monthly natural gas bill covers service -- the cost of delivering the gas -- while the rest covers the gas itself. The distribution charge in Western New York will not rise this winter, according to National Fuel Gas Corp. officials.

But the rise in commodity prices will lead to higher heating bills. If current market rates continue and winter weather is normal, 15 to 20 percent rises are likely, energy officials said.

"If you look at the numbers, last year was the year to own a big house and have all your relatives come to visit. This year, all the commodity prices have gone up," said Jim Todaro, a senior analyst for the U.S. Department of Energy. "We're estimating, assuming normal weather and normal demand, that natural gas prices at the well head will be up 40 percent."

National Fuel officials said it is too early for them to forecast winter gas prices.

Customers on balanced billing will feel the least impact of any winter jump in heating bills, but only about 23 percent of National Fuel's 478,000 local residential customers have balanced billing.

Bigger bills could hit hardest for low-income residents and seniors on fixed incomes, officials said.

Erie County's Home Energy Assistance Program paid $14.25 million for more than 40,000 local households during the program year, which began last November.

The program is funded by the federal government. County officials asked for more money this winter, anticipating a tougher heating season, but have not yet received an allocation, said Charles M. Swanick, D-Kenmore, chairman of the Erie County Legislature.

"I think the HEAP program, particularly for the elderly, is a very successful program. It's always a struggle for the elderly on fixed incomes when the utility bills go up," Swanick said.

Mother Nature holds the wild card.
A mild winter, with low fuel demand, could help ease prices. A harsh winter will create strong demand, which will support higher prices.

"It's difficult for us to say where our prices are going to be, particularly over the course of a winter where the weather can have a big influence," said Julie Coppola, director of public relations for Buffalo-based National Fuel.

National Fuel buys enough natural gas to provide service through a winter 10 percent colder than normal in Western New York, so the utility is not entirely dependent on the fluctuating prices of the commodity market.

The company now buys about one third of its gas at fixed-price contracts over the course of the year. The utility has a large storage field near Concord.

National Fuel changed its purchasing policy a few years ago. The 1996-97 winter was average in Western New York, but unseasonably cold in other parts of the country. The cold U.S. weather spiked natural gas prices.

"It was difficult for customers getting bills in January and February with gas prices much higher than they were used to, when in fact, they weren't using that much more gas," Ms. Coppola said.

One trend working in favor of local consumers is continued deregulation of utilities. National Fuel has a sister company, called National Fuel Resources Inc., which touts a 12 percent savings over National Fuel for customers signing a two-year delivery contract.

Iroquois Energy Management of Hamburg is also an option for customers within National Fuel's delivery system. Iroquois offers several product choices and advertises savings of 10.5 percent to 15.5 percent.

"Our customers who signed a two-year fixed price contract last year will see no price increase this winter," said John Howe, managing partner of Iroquois Energy.

Home heating oil customers could experience similar price increases as local drivers, who have seen gasoline prices jump about 30 percent this year, Todaro said.

Donna Pautler, manager of Pautler Oil Service in Lancaster, said her company shops among several wholesalers to find the lowest rates.

The main factor driving petroleum prices has been a drop in supply. Production quotas established by the Organization of the Petroleum Exporting Countries have more than doubled the price of a barrel of oil this year.

The price of a barrel of oil traded in New York jumped from a low of under $11 last December to $24.80 Friday.

Heavy industry also plays a role in moving the market. Some industrial operations can use either oil or natural gas as fuel. When the price of oil soars, as it has this year, industries switch to natural gas, and the increased demand leads to higher natural gas prices.

Contracts for natural gas futures in September hit a two-year high. National Fuel charged $7.15 per 1,000 cubic feet of gas in September 1998 and $8.01 this September, a 12 percent price increase.

"You never know about the weather. I'm waiting for the wooly caterpillars to come out," said Howe of Iroquois Energy. "We're due for a cold winter. Three mild winters in a row would be unusual. We planned for a cold winter. We bought extra storage gas this summer."

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