Americans got a break on their home heating bills last winter thanks to above-average temperatures and low commodity and fuel costs. This year, particularly for those living in the Northeast, there will be no such luck.
The U.S. Energy Information Administration (EIA) is forecasting double-digit percentage increases that will cost some homeowners and renters hundreds of dollars more in heating costs this year, according to National Fuel spokesperson Karen Merkel.
“There are big differences in how much more consumers will pay based on where they live and how they heat their home, but the big takeaway is that rising commodity costs and a colder winter will put a chill on household budgets,” Merkel said.
Temperatures this winter, based on the most recent forecast of heating degree days from the National Oceanic and Atmospheric Administration (NOAA), are expected to be much colder than last winter east of the Rocky Mountains, with the Northeast and Midwest 17-percent colder and the South 18-percent colder.
However, recent winters provide a reminder that weather during the winter season can be unpredictable, Merkel noted. And the price of heating homes in the winter, too, can vary.
Along with local weather conditions and thermostat settings, fuel expenditures for individual households are highly dependent on the size and energy efficiency of individual homes and their specific heating equipment.
According to the EIA, nearly half of all U.S. households heat primarily with natural gas.
“Reports for the upcoming winter have expectations for households heating primarily with natural gas to spend $116, which is a 22-percent increase, more this winter compared with last winter,” Merkel explained.
However, forecast average expenditures of households heating with natural gas this winter will be comparable to those in the five winters prior to last winter. The increase in forecast expenditures compared with last winter is driven by comparatively similar increases in price and consumption, Merkel described. Residential natural gas prices are forecast to average $10.37 per thousand cubic feet — 11-percent higher than last winter.
“Prices at this level would be the highest since the winter of 2011,” Merkel noted. Consumption, as well, is forecasted to be ten-percent higher than last winter.
EIA projects natural gas inventories will total 3,966 billion cubic feet at the end of October, which would be near a record high going into the heating season.
Propane inventories, which were at record-high levels throughout last winter, are also going into this heating season at even higher levels, according to the EIA. U.S. inventories of propane reached 104.0 million barrels as of Sept. 30 — almost four million barrels, or four-percent, higher than at the same time last year.
Last winter, inventories of propane were drawn down by 33.8 million barrels during the heating season (October-March). An inventory draw of 40.6 million barrels is expected this winter.
In the United States, households that rely primarily on heating oil for heating purposes are most prevalent in the Northeast region.
EIA expects households heating primarily with heating oil to spend an average of $378, or 38-percent, more this winter than last winter, reflecting retail prices that are $0.42/gal, or 20-percent, higher and consumption that is 15-percent higher.
Meanwhile, households heating primarily with electricity are only forecast to spend an average of $49, or five-percent, more this winter, as a result of five-percent higher consumption, including both heating and non-heating uses of electricity, and about one-percent higher residential electricity prices than last winter.
The number of households using cord wood or wood pellets as the primary residential space heating fuel has increased by 26-percent since 2005, to about 2.5 million households in 2015. According to the EIA, about eight-percent of households use wood as a secondary source of heat, making wood second only to electricity as a supplemental heating fuel.
Only about five-percent of all U.S. households heat primarily with propane. EIA expects these households to spend less on heating this winter than in eight out of the past ten winters, but more than last winter, when both heating demand and propane prices were low.
“Despite these trends toward increased prices that are based on comparisons with last year’s expenditures, the costs are only slightly above the base-average for heating homes during the wintertime in the past five years,” Merkel noted. “Last year, temperatures were above-average, so supply and demand were lower than in years’ previous. Now, we’re simply seeing a return closer to the average norm.”
