Winter heating bills likely to increase, but still remain below recent winters

Source: U.S. Energy Information Administration, Short-Term Energy Outlook, Winter heating Fuels Outlook, October 2016 Note: The propane price is a weighted average of Midwest and Northeast prices.

Most US households can expect higher heating expenditures this winter (Oct. through March) compared to last winter, according to EIA’s Winter Fuels Outlook.

Winter heating expenditures for most fuels were especially low last winter, when energy prices were relatively low and warm weather reduced heating demand to the lowest level nationally in at least 25 years.

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Although expenditures for nonelectric fuels are expected to be higher than last winter, expenditures are comparable to or lower than the average winters from 2010–11 through 2014–15.

By comparison, electric heating prices and expenditures are expected to remain relatively stable.

Winter heating expenditures are a function of expected fuel prices and demand for heating. EIA’s projections of heating demand are based on the most recent temperature forecasts from the National Oceanic and Atmospheric Administration (NOAA), which reflect weather that would be 13 per cent colder than last winter but about 3 per cent warmer than the previous 10-year average.

Because weather patterns present great uncertainty to winter energy forecasts, EIA’s Winter Fuels Outlook includes projections for 10 per cent colder and 10 per cent warmer scenarios.

In the past five winters, actual temperatures have been more than 10 per cent colder than NOAA’s Sept. forecast once and more than 10 per cent warmer than forecast twice.

Source: U.S. Energy Information Administration, based on National Oceanic and Atmospheric Administration (NOAA)

The average household winter heating fuel expenditures in EIA’s forecast provide a broad guide to expected heating expenditures.

Fuel expenditures for each household are highly dependent on the size and energy efficiency of individual homes and their heating equipment, indoor temperature preferences, and local weather conditions.

Source: U.S. Energy Information Administration, based on U.S. Census Bureau American Community Survey

The choice of primary heating fuel varies considerably by region, resulting in regional differences in total expenditures.

Natural gas is the most common space heating fuel in every region except the South, where electric heating is more prevalent.

Heating oil is much more common in the Northeast than in other regions, while propane is more common in the Midwest.

Summaries of the winter outlook for individual fuels are provided below:

Source: U.S. Energy Information Administration, Short-Term Energy Outlook, Winter Fuels Outlook, October 2016 Note: Winter covers the period October 1 through March 31.

Almost half of US households use natural gas as their primary heating fuel. EIA expects households heating with natural gas to spend an average of $635 this winter, which would be 22 per cent higher than last winter but nearly equal to the average expenditures for the five winters prior to last winter (2010–11 through 2014–15).

EIA projects natural gas inventories will total 3,966 billion cubic feet (Bcf) at the end of Oct., which would be near a record high going into the heating season.