Winter officially sets in on the 21st of this month. However, the winter chill
set in early this year, when residents of the northern half of the country had
to turn on the heat in their homes in mid-October. And its only going
to get worse, with projections pointing to a colder winter and a tight supply
of natural gas, which three-quarters of Americans use to heat their homes. Its
a bad combination, analysts say, and will lead to energy costs 50 percent greater
than last year in much of the country.
According to the Energy Information Administrations (EIA) winter outlook for 2005 to 2006, residential heating expenditures will increase for all fuel types. On average, households heating with natural gas can expect to pay 48 percent more for fuel ($350 on average); those heating with home heating oil will pay 32 percent more ($378). Households heating with propane can expect to pay 30 percent more ($325) than last year, and those heating with electricity will pay on average 5 percent more ($38).
Exact fuel expenditures, however, actually depend more on geographical location, local weather conditions, the size and efficiency of individual homes, and their heating equipment and thermostat settings. Fuel costs will increase regardless of the weather, but it does play a role: A warmer than average winter, for example, would increase costs by only 30 percent; a colder than average winter, however, could raise costs by 66 percent over last year. The National Oceanic and Atmospheric Administration has projected a winter that is 0.7 percent warmer than the 30-year average, but 6.5 percent colder than last year.
The cost of natural gas has been rising somewhat steadily for four years, largely due to increasing demand. Five years ago, natural gas sold for $2 per million British Thermal Units (Btu), according to an article in the Oct. 10 CQ Weekly. Earlier this year, it sold for $6 per million Btu. In early November, following the one-two punch of hurricanes Katrina and Rita, which struck the natural gas and oil infrastructure in the Gulf of Mexico particularly hard, the cost had risen to $14 per million Btu (see Geotimes, November 2005).
Generally, were looking at a slight increase in demand this winter over last, says Tancred Lidderdale, an economist at EIA, but at a big change in prices, directly tied to the loss of production in the Gulf. Four sources meet U.S. demand for natural gas: natural gas from Canada, which is maxed out; liquefied natural gas, which is similarly maxed out; domestic production; and storage, which is slightly below last year but above the five-year average, Lidderdale says. So that leaves domestic production as the problem, and until disruptions in the Gulf are fixed, theres little that can be done to lower prices that is, little besides conservation, he says.
Conservation is the best, most efficient way to lower natural gas prices in the short term, says Mark Stultz, spokesman for the Natural Gas Supply Association. Were facing some challenges this winter, no doubt, he says, and people nationwide will feel the effects of the hurricanes. This winters price increases due to very tight supplies may end up serving as a wake-up call for national policies that restrict production and accessibility to natural gas supplies, he says.
In fact, in the wake of the hurricanes, Congress has been looking at ways to lower prices in the short and long term, especially for those citizens with the greatest need. In October, Congress added an additional $1 billion to the Low-Income Home Energy Assistance Program (which is still underfunded by $2 billion). That money will help today, said Rep. Joe Barton (R-Texas), chair of the House Resources Committee, at a subcommittee meeting on home energy prices on Nov. 2, but its only a caulking on a leaky window. Congress needs to do more to address the long-term supply and demand problem, he said, by encouraging increases in production.
While Barton and others in the House and Senate are pushing for greater domestic production in the Arctic National Wildlife Refuge (ANWR), in the Rocky Mountain region and offshore on the outer continental shelves. Democrats are cautioning against new production projects as a panacea. In general, says Karen McCurdy, a political scientist at Georgia Southern University in Statesboro, the timing might be right this year for a major energy policy shift. Like the policy shifts that occurred following the OPEC oil embargo and energy shortages of the 1970s, Katrina and Rita grabbed peoples attention, she says. These windows of opportunity, usually provided by some crisis, allow a public platform for change.
As Geotimes went to press, the Senate had passed the budget reconciliation package, in which it authorized drilling in ANWR. The House, however, stripped ANWR from its package, so Congress will have to work out the differences in conference. However, increasing production at new or existing fields, building new plants and pipelines, or increasing the storage capacity for natural gas, are all long-term solutions, as it takes years for any new energy source to enter the market, said Joseph Kelliher, chairman of the Federal Energy Regulatory Commission, in testimony before the subcommittee. In the meantime, he said, end-user conservation lowering consumer demand is the best way to lower prices.
Energy & Resources, Geotimes, November 2005. Print exclusive
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Patricia A. Plunkert, the aluminum commodity specialist for the U.S. Geological Survey has compiled the following information about aluminum, a metal that is used in virtually all segments of the economy.
Aluminum is the second most abundant metallic element in Earths crust
after silicon. Even so, it is a comparatively new industrial metal that has
been produced in commercial quantities for little more than 100 years. Aluminum
is lightweight, ductile, malleable and corrosion resistant, and is a good conductor
of heat and electricity. Weighing about one-third as much as steel or copper
per unit of volume, aluminum is used more than any other metal except iron.
Aluminum can be fabricated into desired forms and shapes by every major metalworking
technique to add to its versatility.
The largest markets for aluminum are transportation, packaging, construction, electrical, consumer durables, and machinery and equipment. The transportation sector, which is the largest market for aluminum in the United States and worldwide, includes the manufacture of automobiles, buses, trailers, ships, railroad and subway cars, as well as aerospace applications and mobile homes. Aluminums light weight and recyclability have provided the impetus for its increased use by the automotive industry to help meet corporate average fuel-economy standards.
Until a few years ago, though, packaging was the largest market for aluminum in the United States. Aluminum is used in such products as beverage cans, food containers, and household and institutional foil. Beverage cans in the United States are made almost exclusively of aluminum, but because of consumer preference, aluminum faces stiffer competition from steel cans and glass and plastic containers in other areas of the world.
Primary aluminum is produced from bauxite deposits, which form from the weathering of aluminum-bearing rocks under conditions of warm, wet climates; good subsurface drainage; and long periods of tectonic stability. In the weathering process, the aluminum is retained as hydrated aluminum oxide minerals, and other constituents are leached from the parent rock.
World bauxite reserves have been estimated at 23 billion metric tons. Guinea and Australia together possess more than one-half of the worlds reserves. More than 25 percent of reserves occur in the Western hemisphere, principally in Brazil, Jamaica, Guyana and Suriname.
The United States is entirely dependent on foreign sources for metallurgical-grade bauxite. Most of the U.S. imports come from Brazil, Guinea and Jamaica and are shipped to refineries in Louisiana and Texas. Although the United States is the worlds leading consumer of aluminum metal, it is no longer the dominant producer. The U.S. share of world production has fallen from just over 40 percent in 1960 to less than 10 percent in 2004. China and Russia have emerged as the leading metal producers with a combined production of almost 35 percent of the world total in 2004. Total world production in 2004 was 29.8 million metric tons.
The recovery of aluminum metal from scrap has become a major component of domestic aluminum supply. In 1960, 450,000 metric tons of aluminum were recovered from new and old scrap. In 2004, more than 3 million metric tons of metal were recovered from scrap in the United States. In 2004, more than 51 billion used aluminum beverage cans were recycled, accounting for more than one-half of all aluminum beverage can shipments that year.
Visit minerals.usgs.gov/minerals for more information on aluminum and other mineral commodities.
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