The high cost of heat: often described in the recent past as an inexpensive fuel option, natural gas is seeing its costs shoot up as supply is temporarily strained.

For those living in the northern states, the cost of heating this year is expected to be considerably higher than in previous years. For users of natural gas, the most commonly used fuel for heat, the extra burden will be excessive. The Energy Information Agency has predicted that the cost of natural gas will increase by as much as 71 percent this winter in the Midwest, with a smaller, but still substantial, increase expected in the Northeast, another bastion of heavy natural gas use. Moreover, the expected increases in the costs of heating are not confined to natural gas. The cost of heating oil is also expected to rise, though not necessarily to the same degree as natural gas.

For users of heating oil, a fuel refined from crude oil, the increased costs stem from the same factors that are increasing the cost of gasoline and diesel at the pumps. Natural gas, touted just a few years ago as an abundant and cheap alternative fuel for heat, is seeing its price rise for other reasons. A large component of the price increase predicted for natural gas this winter is due to the disruption in supply caused by Katrina. According to Jonathan Cogan, a specialist with the Energy Information Agency, the price of natural gas has spiked because "offshore Gulf of Mexico accounts for one-fifth of all natural gas produced nationally, and 35 percent of that is still shut in. Getting that production back on line is crucial to improving the supply and demand situation." In addition, electric utilities are more dependent on gas for electricity generation than in the past. This summer's hot weather caused an upsurge in demand for electricity that caused utilities themselves to use more gas, leaving supplies tight as the heating season approaches. "Hot summers divert gas from storage, which you need plentiful storage volumes of to keep supplies sufficient," Kevin Shannon, president of Open Flow Gas Supply Co., told The Derrick of Oil City, Pennsylvania.

An additional reason for the increasing price of natural gas over the last few years is the lack of new production capacity. A decade ago, natural gas was cheap and plentiful and drilling rigs used for recovery of gas were frequently idle. Paul Solman, reporting on the subject in 2001 for the NewsHour with Jim Lehrer, noted that in 1992, "drilling rigs lay idle off the Gulf Coast. Today, these rigs can't be pressed back into service to increase supply since, after years of low prices, they were sold for scrap." Now that prices are high enough to encourage drilling for new sources of natural gas, the equipment needed has been lacking. "So we've got 1,100 rigs. Compare that with 4,500, to achieve the level we were at in 1983. Try that. I mean, to catch up, it's going to take us two years from the day we start drilling to go online with the natural gas we have," pipeline engineer Larry Strahan told Solman. Since 2001 the situation with rig availability has not improved, and the lack of rigs affects drilling operations across the country. "Day rates for rigs have gone up, but that's not the real problem the problem is just getting a rig," Dick Lowe of Four Sevens Oil Company told the Fort Worth Star-Telegram on September 13. Lowe, who calls the problem "rig choke," has had to wait an extra month to put a rig on a promising site near Fort Worth.

A more serious problem for the future of natural gas in the U.S. is the location of most remaining reserves. The largest such reserves are generally located on federal property in the West and in Alaska's Arctic National Wildlife Refuge (ANWR). These areas are largely off limits for energy exploration and production purposes. According to a report by John Carlisle for the National Center for Public Policy Research, "The long-term outlook for gas prices is not good because most large reserves of natural gas are located in ANWR and the western U.S., areas that the federal government has increasingly closed off to energy development." With heating prices set to skyrocket this winter, an obvious solution for the future would be for government to get out of the way and allow private ownership and development of energy resources now locked away on federal land.