December 2004  Email this  Print this
 License or reprint this article
SPENDING
Energy Prices Heat up
by Pat Mertz Esswein
If you use natural gas to heat your house -- as more than half of all U.S. homeowners do -- you should expect to pay 15% more this winter than last, assuming moderate weather, says the Department of Energy. Industry sources predict the cost could go much higher. Figure on a 28% hike if you heat with fuel oil. Higher energy prices will pinch your pocket in other ways, too, because of a run-up in the cost of raw materials derived from natural gas. "Natural gas is the other energy crisis," says Kevin Swift of the American Chemistry Council. Plastic resins, which are derived from natural gas, are used to make plastic goods of all kinds. Resin producers have seen cost increases that total 40% to 60% over the past few years. Carpeting, paint, and personal and cleaning products, such as hand soaps and laundry detergents, also have natural gas as an ingredient. Even food prices are under pressure because natural gas is a critical component of fertilizer.
So far, manufacturers have swallowed cost increases and stepped up efficiency to remain competitive. But they may be reaching their limits, says Alex Strawn, chairman of the Process Gas Consumers Group and senior energy-purchasing manager for Procter & Gamble. "Price increases will come sooner rather than later if the winter is severe," says Strawn. Tiremakers Goodyear and Cooper have already raised prices. Even penny-pinching Wal-Mart has made price concessions to suppliers of plastic goods. |
|
MAGAZINE
