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How cold is it?

In Michigan, it's so cold, demand for natural gas has pushed prices 80 percent higher than they were three years ago.

It's so cold in Ohio, the cost of the heating with gas has more than doubled this winter, compared to last year's chilly season.

Throughout the Midwest, it's so cold, households burning natural gas can expect to pay an average $146 more in home heating costs by this winter's end than they did last year. Midwest natural gas heating costs have soared in just three years from an average $602 per household during the 2001-2002 heating season to more than $1,000 this winter according to the National Energy Information Center (EIC).

Unfortunately, prices probably haven't peaked and the same cold weather that's blowing in record snow storms is also burying households in natural gas bills.

Analysts say the fundamentals apply -- with lower production of natural gas now than there was years ago, with the economy improving and with temperatures falling, increased demand will only further exacerbate shortages.

Less fuel means higher prices.

It may be time to seriously consider replacing that outdated furnace.

Your gas-fired heating system -- which in most households includes a furnace -- burns the most natural gas in your home and an Energy Star rated furnace, with an AFUE (Annual Fuel Utilization Efficiency) of 90 percent or greater, will give you the most savings.

The AFUE rating measures the amount of heat actually delivered to your house compared to the amount of fuel that you supply to the furnace. For example, a furnace with a 90 percent AFUE rating converts 90 percent of the fuel that you supply to heat -- the other 10 percent goes up the flue.

Don't be put off by the cost of installing a furnace.

Energy cost savings will eventually pay for most if not all of the cost.

Even if your heating system is mechanically functioning well, if it's more than 10 to 15 years old, it's probably 15 percent or more less efficient than today's systems. The U.S. Department of Energy says one in four residential furnaces is more than 20 years old.

Older furnaces also likely don't have many of the programmable features that help you automate savings. For example, you can cut your heating costs by 2 percent to 3 percent for each degree you turn down the thermostat and if you automate the process, the savings becomes a no-brainer thanks to technology.

Adding to your savings, many local power companies offer rebates when you install qualified appliances, typically those with the federal government's Energy Star seal of approval.

To help your furnace work at optimum levels use Energy Star Home Sealing techniques, a process of simply closing holes, cracks, and gaps where air can pass into or out of your home.

The biggest holes are most often found in the attic and the basement. Caulk, spray foam, and weather stripping are the most common materials used for air sealing.

Likewise the recommended levels of insulation keeps your furnace humming.

If you aren't handy, you may need to hire an energy specialist who can help you get the job done properly, inspect the duct system and perform other energy-related auditing chores and upgrading jobs.

To compound your natural gas cost savings look for the Energy Star rating on other outdated gas appliances -- including boilers, heat pumps, water heaters, (clothes dryers are not Energy Star rated) and others.

Keep them all in tip-top working condition with professional installation, regular maintenance, and proper manual-guided operating techniques.

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