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 it’s 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. It’s
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 Administration’s (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, we’re 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, there’s 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. “We’re facing some challenges this winter, no doubt,”
he says, and people nationwide will feel the effects of the hurricanes. This
winter’s 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 “it’s 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 people’s 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.
Megan Sever
Links:
Energy & Resources, Geotimes, November 2005. Print
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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 Earth’s 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. Aluminum’s
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 world’s 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 world’s 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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