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Heating costs expected to rise, blackouts possible as gas supplies tighten

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Officials in the United States and United Kingdom are warning about potential ramifications of a diminishing natural gas supply, including higher heating costs and even potential blackouts during the upcoming winter months. The gas supply to both countries has been threatened by Russia’s invasion of Ukraine, and was further hurt by the OPEC+ decision to cut oil production by 2 million barrels per day.

In Indiana, utility company NIPSCO projected last week that natural gas bills will shoot up by 18% this winter. The utility estimates customers will pay on average $661 to heat their homes this winter, up from $559 during the same period last year and $102 more for natural gas than during the rest of the year. 

“There are a multitude of factors contributing to the anticipated increase in costs this winter season, including natural gas market prices are 24% higher than last winter,” NIPSO said. “Current market prices are higher than last year due to lower production volumes than previous years, greater global demand due to European energy supply concerns, and storage balances that are behind last year’s total and five-year average at this time of year.”

The U.S. Energy Information Administration’s Winter Fuels Outlook had a similar projection. According to the outlook, U.S. households that primarily use natural gas to heat their homes will likely spend an average of $931 this winter. That’s up 28% from last winter.

In addition to the increased heating costs, a reduced gas supply could cause strain to the power grid, potentially leading to blackouts. New England’s power-grid operator, ISO New England Inc., warned of the need for rolling blackouts to keep electricity supply and demand in balance.

“The most challenging aspect of this winter is what’s happening around the world and the extreme volatility in the markets,” ISO New England Chief Operating Officer Vamsi Chadalavada said. “If you are in the commercial sector, at what point do you buy fuel?”

There’s a similar warning overseas, with Nation Grid Chief John Pettigrew saying blackouts could happen between 4:00 p.m. and 7:00 p.m. on weekdays if gas imports are reduced by “really cold” days in January and February.

The Wall Street Journal, Barron’s, The Times of Northwest Indiana, and WalesOnline contributed to this report.

THE MAYOR OF EL PASO’S TIME, ENERGY, AND CITY FINANCES HAVE LARGELY GONE TOWARD THE TENS OF THOUSANDS OF MIGRANTS ENTERING HIS CITY SEEKING SHELTER.
AND WHILE THE FEDERAL GOVERNMENT IS SENDING IN RESOURCES…
THE MAYOR REPORTEDLY SAID THE WHITE HOUSE IS WORKING TO KEEP IT QUIET.
THE NEW YORK POST IS REPORTING THE MAYOR AND WHITE HOUSE OFFICIALS HAD A PRIVATE PHONE CONVERSATION…AND IN IT…THEY ALLEGEDLY TOLD THE MAYOR NOT TO DECLARE A STATE OF EMERGENCY OVER THE MIGRANT INFLUX.
CITY COUNCIL MEMBERS CONCLUDING THE BIDEN ADMINISTRATION DIDN’T WANT A STATE OF EMERGENCY DECLARED OVER THE FEAR OF BAD OPTICS.
BUT BAD OPTICS ARE HAPPENING WHETHER IT’S DECLARED AN EMERGENCY OR NOT.
EL PASO HAS SEEN 62 THOUSAND MIGRANTS ENTER THEIR CITY LIMITS IN A SIX-MONTH SPAN.
10 THOUSAND BEING RELOCATED TO NEW YORK BY BUS.
OTHERS MAXING OUT CAPACITY IN SHELTERS AND SOME HOTELS IN EL PASO.
THE DIFFERENCE-MAKER IN CALLING SOMETHING A STATE OF EMERGENCY OR NOT…COMES DOWN TO MONEY.
WHILE THE FEDERAL GOVERNMENT HAS REIMBURSED TWO MILLION DOLLARS TO THE CITY…IT COVERS JUST A FRACTION OF EL PASO’S 8 MILLION SPENT SO FAR.
OTHER CITY OFFICIALS CLAIMING IF THE MAYOR WOULD’VE DECLARED THE EMERGENCY MONTHS AGO…MORE FUNDING COULD’VE LENT ITSELF TO BETTER SUSTAIN AN ALREADY-FRAGILE SYSTEM IN PLACE.

Officials in the United States and United Kingdom are warning about potential ramifications of a diminishing natural gas supply, including higher heating costs and even potential blackouts during the upcoming winter months. The gas supply to both countries has been threatened by Russia’s invasion of Ukraine, and was further hurt by the OPEC+ decision to cut oil production by 2 million barrels per day.

In Indiana, utility company NIPSCO projected last week that natural gas bills will shoot up by 18% this winter. The utility estimates customers will pay on average $661 to heat their homes this winter, up from $559 during the same period last year and $102 more for natural gas than during the rest of the year. 

“There are a multitude of factors contributing to the anticipated increase in costs this winter season, including natural gas market prices are 24% higher than last winter,” NIPSO said. “Current market prices are higher than last year due to lower production volumes than previous years, greater global demand due to European energy supply concerns, and storage balances that are behind last year’s total and five-year average at this time of year.”

The U.S. Energy Information Administration’s Winter Fuels Outlook had a similar projection. According to the outlook, U.S. households that primarily use natural gas to heat their homes will likely spend an average of $931 this winter. That’s up 28% from last winter.

In addition to the increased heating costs, a reduced gas supply could cause strain to the power grid, potentially leading to blackouts. New England’s power-grid operator, ISO New England Inc., warned of the need for rolling blackouts to keep electricity supply and demand in balance.

“The most challenging aspect of this winter is what’s happening around the world and the extreme volatility in the markets,” ISO New England Chief Operating Officer Vamsi Chadalavada said. “If you are in the commercial sector, at what point do you buy fuel?”

There’s a similar warning overseas, with Nation Grid Chief John Pettigrew saying blackouts could happen between 4:00 p.m. and 7:00 p.m. on weekdays if gas imports are reduced by “really cold” days in January and February.

The Wall Street Journal, Barron’s, The Times of Northwest Indiana, and WalesOnline contributed to this report.

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