Even though gas prices aren't as high as they were last fall, Americans' wallets are still likely to take a hit this winter because the prices of natural gas and heating oil are still going up.
The Energy Department says that people who heat their homes with natural gas can expect their monthly bills to go up by 48 percent from last year. If it's a particularly cold winter, the price will go up even more.
This can be hard for people to think about, especially since most homeowners already spend an average of $4,100 per year on energy.
Even though the geopolitics and economics of energy are not always easy to understand, rising prices always mean that there is too much demand and not enough domestic supply. This has been the case for years. Because of this, America has had to get most of its natural gas from places outside of the country, where prices are much lower.
In Saudi Arabia, natural gas costs 75 cents per million Btu, but it costs $1.25 per million Btu in Kuwait. When you compare this to the almost $13 per million Btu price in the U.S., it's easy to see why the U.S. chooses to import its gas.
But companies like Mammoth Resource Partners Inc., an oil and gas exploration company based in Kentucky, are starting to stop natural gas prices from going through the roof by tapping into the gas-rich Appalachian Basin.
Dr. Roger L. Cory, president of Mammoth and a frequent guest speaker on the topic of "peak oil," said, "The Appalachian Basin is the best chance in North America to reduce America's reliance on foreign gas."
Much of the rise in heating oil and natural gas prices can be blamed on the hurricanes that hit the Gulf Coast last fall. These storms shut down refineries and terminals, which led to higher prices. Until hurricane Katrina, many did not understand that gas from overseas is liquefied and shipped to the Gulf Coast for offloading and re-gasifying, whereas domestic supply, such as that explored by Mammoth Resource Partners, can safely pass through inland pipelines directly to domestic markets for use in America's homes.
