Natural gas prices beat the heat

Monthly winter tab could be $150 higher

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For most people, the warmer weather is masking a run-up in natural gas prices that soon could make soaring gasoline prices seem tame by comparison.

NIPSCO residential natural gas prices have increased 105 percent since December and Nicor's have jumped 89 percent, according to prices published by the utilities.

Some local businesses already are feeling the heat, because they actually use more natural gas this time of year than they do in the winter.

"This is the season we get hit, because it's wedding season," said Edward Wontor, co-owner of Cakes by Karen, in Highland. "We definitely have seen it here. It's like overnight."

The big, rotating gas-fired oven at Cakes by Karen accounts for about 48 percent of its utility bill, Wontor said. It runs at 400 degrees at least five hours per day this time of year.

NIPSCO adjusted the bakery's monthly budget plan bill upward by $150 in May. Wontor said the bakery's natural gas usage has not changed appreciably.

NIPSCO and Nicor point out they make their profits on the delivery of natural gas and not on the price, which simply reflects what they pay on the open market.

"It is a direct pass-through," NIPSCO spokesman Nick Meyer said Tuesday. "Those are nationwide increases that all utilities throughout the country are experiencing."

Most of the natural gas used by residential customers goes to heat homes in the winter months, so that is when hikes in natural gas prices get the most notice.

NIPSCO told customers this week that a typical customer would pay $17.45 more for natural gas in June as compared to May, if their usage remained the same.

Typical homeowners could see natural gas bills $150 higher this winter compared to last, if the current price increases hold up.

The U.S. Energy Information Agency is forecasting prices will remain elevated through the winter months and could go even higher in the winter of 2009.

Nationwide, residential natural gas prices have jumped 89 percent since December, according to the most recent Energy Information Agency data.

Wontor said bakeries, like many other businesses, are fighting to keep prices down in the face of skyrocketing commodity prices. He predicts price hikes in flour and other basics, along with soaring gasoline prices, will drive many bakers out of business this year.

The American Gas Association is forecasting if natural gas prices hold up through the summer, consumers could face "substantial increases in bills for the 2008-09 winter heating season."

The association represents 202 utilities and companies that deliver natural gas. It points out that a large portion of gas supplied to consumers in the winter is actually priced at market levels in previous months, when utilities put natural gas into storage.

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