Even in Summer, Americans Dread Winter Heating Bills - NY Times 8/26/2005

[Coastie for Truth]

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It might still be 80 degrees outside, but, four months before the first days of winter, many Americans are already facing the prospect of keeping warm while having to stay within their budgets. Instead of the short spike in energy prices that most expected, it now appears that a variety of high energy bills - for heating oil, propane, natural gas and electricity, as well as gasoline - will be around for a long while.

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Economists generally seem convinced that the higher energy prices will not derail the economy. But they may cause it to wobble a bit: Americans will spend $600 billion this year on oil purchases - everything from gasoline and diesel to jet fuel and heating oil. In two years, the national oil bill has jumped by $210 billion, or 54 percent, according to Larry Goldstein, the president of the Petroleum Industry Research Foundation. In addition, the nation spent $120 billion on natural gas in 2004, according to the American Gas Association. That is expected to increase to about $167 billion this year.

"High energy prices act like a consumption tax and consumption taxes eventually hurt the economy," Mr. Goldstein said.

That extra burden has already shaved three-quarters of a percentage point off American growth, he estimated, but has not put much of a dent in the expanding economy.

The cost of oil is stirring larger waves in the economy now.

As a direct share of the gross domestic product, oil accounted for 8.5 percent of the economy in 1980. As energy conservation measures took hold, and as Americans grew wealthier, that fell to a low of 3.1 percent in the mid-1990's.

Last year, it was up to 4.2 percent. This year, oil is expected to account for 4.8 percent of the economy, according to Mr. Goldstein.

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Bottom Line

1. Could lead to a recession.
2. Urban poor hit hard.