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Slowing Economy Results In 20% Lower Heating Costs This Winter

By: Steve Johnson

10/1/2009 - 21 Comments

Finally I found some good news about the economy that is not related to the phony economy that the government is trying to re-create with more inflation. 

Apparently the slowing economy has resulted in an increase in the supply of fuels and natural gas. Inventories are now 16 percent above their five-year average.  This increase in fuel is expected to reduce heating bills by 20 percent this winter according to this Reuters article.

"As the economic downturn deepened throughout 2008 and 2009, energy demand fell, but supply was relatively slow to respond. As a result, stocks of many fuels were pushed well above typical historical levels," the Energy Information Administration said in its weekly review of the oil market.

"In total, fuel supplies are stacking up well ahead of winter -- a bright spot for consumers that, ironically, is due in large measure to the recession," the Energy Department's forecasting arm said.

U.S. natural gas inventories are now 16 percent above their five-year average and are expected to hit a record 3.840 trillion cubic feet at the start of the winter heating season on Nov. 1, the EIA said.

CenterPoint Energy (CNP.N) said on Wednesday it will pass along lower wholesale natural gas prices to its customers in Minnesota, which are expected to lower winter heating bills by up to 20 percent.”

This brings up the ongoing inflation vs. deflation argument and points to deflation.  But I think that inflation is still going to overtake the few things that are getting cheaper, because most of the goods we consume today are imported and with a weakening dollar, the cost of imported goods will be increasing. 

I also suspect that this is only a temporary dip in prices based on low demand and high supply.  As the dollar weakens, imported oil and natural gas will increase in price and by next year we may have a 20 percent increase in our heating bills.

Therefore enjoy it while you can and put the extra money that you save in a raining day fund because the storm clouds are still circling.

This is also a testimony to how capitalism reduces prices when prices are allows to function in accordance with supply and demand.  

Low prices are a good thing. I wish we had more low prices on cars and houses, but the government is clearly standing in the way of that happening because the entire financial system is in far too much debt based on high inflated prices.

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