Wood you like to save on heating costs?

Gas, oil prices expected to increase this winter

Posted: Wednesday, October 25, 2006

With crude oil and related fuel product costs hitting record highs this year, it should come as no surprise that a number of Kenai Peninsula residents are turning back the clock and looking to woodstoves for heat, at least as a supplemental source.

A Fireplace Store in Sterling is reporting woodstove sales about 20 percent higher this year, according to Debbie King.

She said modern woodstoves burn more efficiently than stoves from the past, producing more heat with little or no residue inside the stove.

“They’re airtight, have less emissions and you hardly see any smoke at all,” King said of the newer breed of stoves, which range in price from $599 to $2,599.

She said $1,500 to $2,000 is a good average people can expect to pay for a new stove.

King said the Sterling store delivers and installs a full line of stoves, and, “This time of year, we’re booked out about three weeks.

“October, November and December are our busiest months,” she said.

In addition to offering new stoves for sale, King said The Fireplace Store has a bulletin board for advertising used stoves.

“People want them for their garages, and a lot of young people don’t have a lot of money for a new one,” King said.

Money is likely to be an issue for more than just young people this winter.

Enstar Natural Gas Co. spokesperson Curtis Thayer said the company is “anticipating a 30 percent increase (in home heating costs) over last year.”

The average homeowner on the Kenai Peninsula can expect to pay between $120 and $130 a month this winter, he said. Although Enstar is not raising its transportation rates — the part of the gas bill by which Enstar makes its money — prices are based on a crude oil price index, which was $59 last year and is $72 this year.

Enstar has not raised its transportation fees in five years, according to Thayer. He added that the company is not anticipating a hike next year, either.

“Actually higher (oil) prices hurt Enstar because people dial back (thermostats),” Thayer said. “We make our money based on volume transported.”

Electricity prices also are indexed to the cost of fuels, but because rates are based on a rolling 12-month average, prices will actually go down as winter begins, said Homer Electric Association Manager Brad Janorschke.

“Right now the wholesale power cost rate adjustment is down .442 cents per kilowatt hour,” Janorschke said. “The adjustment will continue to go up between now and the end of the year.”

Because there is a lag between the time oil prices go up and Chugach Electric passes along the increase to HEA, “it takes time for prices to work through the system” and show up in customers’ bills, he said.

Janorschke said the Regulatory Commission of Alaska oversees what customers are charged for electricity.

Home heating oil prices are coming off a record high because of record high crude oil prices, according to Bob Cox, vice president of Alaska Oil Sales and Petro Marine Services.

“We are all relieved to see prices come back down from the highs of this summer,” Cox said.

He said fuel oil prices reflect the rack price charged at the refinery, with Alaska Oil adding handling costs and its profit margin.

Due to environmental requirements, as of Oct. 15, all highway diesel must be ultra low-sulfur diesel, according to Cox, and because the Tesoro refinery in Nikiski has committed to the ultra low-sulfur grade, higher-sulfur diesel, which would be suitable for home heating, will no longer be available.

“Most people will be buying No. 1 diesel for home heating,” Cox said.

Generally speaking, Cox said the price of home heating fuel follows the same principal as gasoline in that it is based on the price of a barrel of crude oil.

Phil Hermanek can be reached at phillip.hermanek@peninsulaclarion.com.

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