Early cold snap highlights potential for increased heating costs
Volatile natural gas prices are affected by war in Ukraine and fluctuating international markets.
SIOUX FALLS, S.D. — The sudden and sustained dip in temperatures in the upper Midwest got everybody’s attention this week.
It also tweaked the cost of keeping warm as natural gas prices rose in reaction to increased demand. Volatile swings in the natural gas market have become the norm after several years of stability.
That’s due in part to fallout from the war in Ukraine — where Russia has cut supply to Europe — but also from the increased reliance on natural gas to make electricity at home, said Chris Nelson, a member of the South Dakota Public Utilities Commission.
The PUC predicted last month that heating costs in the coming winter would be roughly the same as last year. While that assessment hasn’t changed, there is no way to know for sure, Nelson said.
“I’ve never seen the natural gas market as volatile as what it’s been the past six months,” he said. “We can’t predict what it will do over the course of the winter. We encourage folks to be aware and be prepared.”
Propane users in rural areas should expect to pay a bit more this year as well.
Prices are a bit higher than last year but not extremely so, said Michael Koopman, of Koopman and Sons Gas Co. in Colton. The current cost is just below $1.90 a gallon, but that will probably change as it gets colder and demand goes up.
“There’s definitely an increase to consider,” Koopman said. “It hasn’t gone outrageous yet, but winter hasn’t really gotten here.”
Like natural gas, supply problems in one part of the world affect overall demand for propane, which drives prices.
“It’s a global market anymore,” he said. “There are so many factors that we don’t control.”
The dip in temperatures also revealed problems with heating systems across the Sioux Falls metro area. That led to a burst in calls to companies such as Howe Inc., where the team of technicians has been out fixing furnaces for families who woke up to frosty conditions.
Adam Sundermann, service operations manager at Howe, said they encourage customers to get their systems serviced during the warmer months to prevent surprises. The rapid growth in the city exacerbates the normal pulse, meaning the past week has been a busy one, he said.
“We are able to get to a lot of people, but it also means our customer base is big,” Sundermann said.
The crew tries to get to everybody that day, but that’s not always possible, when the demand is up, he said. “We can’t save the whole city.”
A few weeks ago, the abnormally pleasant fall weather had suppressed prices for natural gas, the main form of fuel used to heat homes in the area. But the sustained cold snap reversed that trend.
Predicting the future of natural gas prices is about as certain as the weather, said Geoff Greenwood, a spokesperson for MidAmerican Energy.
The utility tries to keep prices low by buying and storing natural gas when prices are favorable. The warm fall helped with that but the cold snap drove prices up.
“But regional temperatures are forecast to moderate later this week, which could impact the market again,” Greenwood said. “Natural gas market prices can be volatile as regional temperatures — and demand — fall and rise during the winter heating season.”
Greenwood said the best response to heating costs is to conserve energy. Programmable and smart thermostats, for instance, allow residents to tailor the temperature to the situation, saving energy when it’s not needed.
“Weather conditions and how much gas you use both help determine your monthly bill amount,” he said. “So there are things you can do to help control how much gas you use, regardless of the temperature and natural gas market prices. Through energy efficiency measures, you can use less.”
Market volatility and a push for efficient and cleaner energy sources, have also made alternative systems such as heat pumps more attractive to consumers.
The Inflation Reduction Act signed by President Biden in August includes financial incentives for homeowners to switch to the pumps, which provide heat in the winter and air conditioning in the summer. These heat pumps are different from the geothermal systems, which use water warmed underground and piped back into the home.
The incentives are income based. Families making 80% or less of the median income for that area can get the full cost covered. Those from 81% to 150% qualify for half the cost. Households that exceed 150% of the median income will qualify for up to $2,000 in tax credits.
Sundermann, of Howe in Sioux Falls, says heat pumps are more popular outside the city where propane heat is more common. The systems still require a backup fuel source when it gets very cold but they serve as both heating and air conditioning.
The coming incentives from the federal government will make them more popular next year, Sunderman said. “I think it’s going to get there.”
How to save energy this winter
Here are some additional tips to save money on heating costs from MidAmerican Energy:
- Check your heating system. Have it serviced to keep it running properly and efficiently. Change your furnace filters regularly, which helps ensure your furnace doesn’t have to work as hard.
- Make sure your vents aren’t blocked so heated air flows freely.
- Seal any drafts. Check windows, doors, fireplaces and electrical outlets for air leaks and use caulk or weatherstripping to help seal leaks. Weatherizing your home will help reduce your natural gas usage and can make your home more comfortable.
- A programmable or smart thermostat will help you better control your heating costs.
- Turn down your thermostat to the lowest temperature that you feel is comfortable for you — the lower the temperature, the less energy you use. Set your thermostat 7 to 10 degrees lower when you are away from home or asleep under a blanket.
- Open curtains to the south on sunny days to take advantage of the sun’s radiant heat, and close them at night to help insulate against cold air coming from windows at night.
- Wear warmer clothes inside your home — the quickest way to warm up during the winter won’t add a dime to your heating bill.
HomeCheck Online is a free 24/7 online energy efficiency tool that will enable you to easily assess your energy efficiency at home.
MidAmerican also offers Budget Billing , which averages the cost of energy per month, removing the seasonal fluctuation.