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In a season of roller-coaster energy costs, the drop in oil and natural gas prices in recent days was greeted as good news. But they remain so high that experts are predicting that heating bills this winter will far exceed those of last year.

Even after a precipitous decline from its peak in early July, the price of natural gas is still 11 percent above where it was last winter. Heating oil is 36 percent higher, with the government projecting that the costs of both fuels will stay high. Electricity prices are also up moderately.

For those that use natural gas, which in Wisconsin outnumber heating oil customers by about a three-to-one ratio, being aware of the price hikes now could help prevent a big surprise come December or January.

"Unless consumers recognize the price of natural gas is higher, they won't really know it until they get their first bill," said Valerie Wood, owner of Energy Solutions, a Verona company that helps businesses develop natural gas buying plans. They could be in for some price shock but the news is better now than it was a month ago."

Natural gas was selling at $1.30 a therm last month but was at 88 cents a therm Wednesday. Last year at this time, natural gas was selling for 62 cents a therm, Wood said.

"The price has definitely fallen off but we're still at a considerably higher level from where we've been historically," Wood said.

Madison Gas & Electric said the reason for the higher natural gas prices can include reduced production at U.S. wells, increased demand, hurricanes that disrupt market supplies and more power using natural gas to produce electricity.

At Renew Wisconsin, a state-wide, nonprofit organization that promotes the use of renewable energy, Ed Blume said the high prices of natural gas will likely cause many to react.

"The heating prices this winter could do what gas prices have done to driving," said Blume, the organization's director of outreach and communications. "People are going to look for ways to conserve natural gas or replace natural gas."

One example for consumers to consider is a solar hot water system, which with incentives, can cost about $7,500. Heating water for showers, baths and the kitchen accounts for about 15 percent of a home's energy use, Blume said.

"For a young family, solar hot water makes so much sense," Blume said. "Without question, people are going to notice higher heating bills."

Higher heating costs will hit particularly hard in the Northeast, where many people use heating oil. Given how unpredictable energy markets have become, most fuel dealers are not offering their customers price protection plans, or locked rates, as they typically do at this time of the year, said Dan Gilligan, president of the Petroleum Marketers Association of America, the biggest trade group for fuel retailers.

Locking in such protection makes sense in the summer months when heating oil normally sells at a discount and consumers can expect prices to rise in the winter. This year, however, few households are willing to take a bet on where energy prices may be headed. Retail heating oil is selling today at around $4.50 a gallon, compared with $3.30 last winter and less than $2 a gallon only three years ago.

"The market has been completely turned on its head this summer," said Andrew Heaney, who runs a New York heating oil cooperative, Heat USA. "I've been in this business for 15 years, and this is the most volatile we've ever seen."

A recent editorial in a small-town Vermont newspaper warned of calamity. Record heating oil prices "could be New England's own Katrina disaster," wrote the paper, The Stowe Reporter.

"The cost of energy is getting out of reach," said Mark Wolfe, the executive director of the National Energy Assistance Directors' Association, which represents state programs offering help to poor households. "It's not just going to affect poor people, but also moderate to middle-class households. People are going to become more impoverished to pay for heating this winter."

Heating oil retailers face another problem. Given the nation's credit crunch, many say they are finding it hard this year to get new credit lines from banks to help them cope with the rise in prices. As a result, they are not building inventory as much as they would in a normal year, Gilligan said. "The cost of hedging has become very pricey," he said.

"People are going to have a tough time," said David Moody, the dispatcher and a driver at Flynn's Oil Co., a small distributor in Exeter, N.H. "We are trying to avoid having angry customers. Having angry customers before the start of winter, well, that's not good business."

The average heating oil bill in states like Massachusetts, Maine or New Hampshire, in a region where 8 million households use heating oil to fire their furnaces, is set to jump by as much as $1,500 this winter compared with last year, according to estimates derived from the government's latest forecasts for energy prices.

Amid a slowing economy, high energy costs are weighing heavily on pocketbooks, and have become a major political issue. Airlines and automakers have posted billions of dollars in losses, consumers have cut some of their spending to compensate for pricier gasoline, and soaring energy prices have contributed to inflation across the economy.

But Democrats and Republicans are deeply split about how to respond. The deadlock in Washington was apparent last month when the Senate failed to a pass a bill to double energy assistance to low-income households because Republicans insisted on including measures to allow for more offshore drilling.

"This could be the winter of our discontent," said Daniel J. Weiss, a senior fellow at the Center for American Progress. "This is going to have a huge impact. It will start to pinch people in September and October and could influence this fall's elections. Remember, it is much easier for people to drive less than it is to heat less."