Mellody Hobson: Don't Get Burned on Home Heating Costs

Oct. 12, 2005 — -- Natural gas prices could rise up to 77 percent in the Midwest this winter, and home heating oil prices could increase as much as 33 percent, according to the U.S. Energy Information Administration. And those estimates were made prior to Hurricane Katrina.

"Good Morning America" financial contributor Mellody Hobson discussed what these potential increases mean for the average consumer.

A household that used 800 gallons of heating oil a year at $1.92 per gallon would pay $1,536. At $3 per gallon, the cost would climb to $2,400. For the approximately 8.1 million households that use home heating oil – mostly located in the Northeast – this will be a huge hit to the wallet. In fact, in New England, heating oil costs an average of $1.94 a gallon, up from $1.33 a gallon at the same time last year.

Am I still able to lock-in rates for my heating costs this winter?

Unfortunately, if you heat your home with heating oil, it may be too late to lock in a rate, as pre-pay programs typically require a commitment by the end of August. However, in some regions of the country, there are residential choice programs that may enable you to get a more competitive rate for your heating costs. You should contact your local utility to see if they offer such a program, which would allow you to use different providers.

For example, People's Energy in Chicago has a program called Choices for You, which is similar to what most major utility companies across the country offer. Participating suppliers may be able to provide pricing and service options that large utilities cannot. You may be able to find a provider offering a fixed price for the natural gasoline, which would "insulate" you from fluctuations in the market price of gasoline.

What can I do to save on home heating costs this winter?