Sunday, May 04, 2008

Forecast for Next Winter: Cold

One of the things that doesn't seem to be brought up much when discussing real estate (but that you, gentle reader, should factor in when looking at any real estate) is the cost of heating the place. Heating bills are rising beyond people's ability to pay even faster than mortgage payments. In the Spring of 2007, after the Winter cut-off moratoriums (imposed on utilities by those nasty regulators so we don't have an outbreak of people freezing to death in their homes) ended, 1.2 million households were disconnected. These were almost exclusively electric and natural gas houses, since propane and fuel oil aren't provided by regulated by utilities (As an aside, the local providers of propane and fuel oil aren't obligated to keep supplying those who can't pay, unlike the regulated utilities. Given that those two heating fuels have shot up 30-40% over the last year and are still rising, this part of the market is likely to turn into a slaughterhouse. Time to invest in companies that make space heaters and potbellied stoves.). Electricity and natural gas prices have been relatively stable (if you can call increases of less than 10% stable, which should give you some idea of the state of the energy market), but they won't stay that way.

Now is the time to come up with a plan to deal with next Winter, when prices will undoubtedly be worse. I'm afraid you're on your own on this because, if you were expecting any sort of a national policy that meaningfully addressed the problem, remember that this is an election year, and two of the three people with any chance of becoming the next president think it's a good idea to cut the gas tax for the Summer. So we shall limp into next Winter about like Napoleon and Hitler limped back from Moscow.

There will be blood.

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