EIA Report Forecasts Winter Use and Cost of Propane and Heating Fuel
EIA forecasts that retail prices for heating oil and propane will be lower this winter than last. Although crude oil prices affecting heating oil and propane retail prices are similar to crude oil prices a year ago, prices for wholesale heating oil and propane have fallen. Propane prices have decreased because of rising natural gas production. Heating oil prices have decreased because of lower refining margins for distillate fuel. Several factors have contributed to the lower margins, including falling demand for U.S. distillate fuel. Although Russia has relaxed its recent ban of distillate exports, those exports are still partially restricted. This restriction has added uncertainty for U.S. heating oil prices heading into winter.
EIA expects households in the Midwest to spend about $1,300, 11% less than last winter, reflecting a forecast for a 13% drop in propane prices and slightly higher propane consumption. In the South, EIA expects households to spend about $1,180, 6% more than last winter, reflecting a 9% increase in consumption and a 3% decline in propane prices. For heating fuel, the EIA forecast households will use about 440 gallons on average this winter. At an average price of about $4.20/gal, they estimate average winter expenditures for those homes will be $1,850. Although the forecast for heating oil prices will be about 10 cents/gal less than last winter, increased consumption means spending will be $130 higher this winter. To read the entire report, please click here.