U.S. EIA Projects Home Heating Costs Will Increase Most For Natural Gas – 28%, Heating Oil – 27%, Electricity – 10%, Propane 5% This Winter
On October 12, the U.S. Energy Information Administration released its Winter Fuels Outlook forecasting heating costs for homes that heat with natural gas will rise by 28%, heating oil by 27%, electricity by 10%, and propane 5% from October–March.
According to the EIA, 4% of U.S. households (largely in the Northeast) use heating oil as their primary heating fuel. The EIA forecasts average retail prices this winter for heating oil will be 16% higher than last winter.
This translates into a total average expenditure of about $2,350 per household this winter, up 27% from last winter.
Total average heating oil consumption per household is expected to be 520 gallons, up 9% compared with last winter.
The retail price of heating oil is expected to average $4.54/gal during the winter of 2022–23, up 16% (64 cents/gal) from the previous winter.
Higher heating oil prices are driven by higher refining margins than last winter. Inventories in the Northeast ended September 57% below the five-year average due to: limited regional refining capacity; increasing domestic distillate demand in the first half of the year; and low imports as a result of generally tight distillate markets worldwide.
According to the EIA 5% of all U.S. households use propane as their primary heating fuel.
Households in the Northeast will spend an average of $1,970 per household, which is 8% higher than last winter.
The EIA forecasts that households in the Midwest, and South will spend 5% ($80) more, on average, for propane this winter compared with last winter, driven by higher expected consumption.
Households in the Midwest will spend 5% more than last winter (an average of $1,650 per household).
In the South, EIA expects households to spend 4% more than last winter (about $1,510 per household).
Nearly half of all U.S. households heat primarily with natural gas. EIA expect households that use natural gas as the primary space heating fuel will spend about $930 this winter, 28% more than they spent last winter.
The forecasted increase in natural gas expenditures is the result of both higher expected prices and consumption.
Working natural gas inventories in the EIA forecast reach almost 3.5 trillion cubic feet (Tcf) by the end of October, or 6% below the previous five-year average.
The EIA predicts U.S. households that heat primarily with electricity will spend 10% more than last winter, at an average of about $1,360. This increase is based on EIA’s forecast of 4% more electricity consumption and 6% higher residential electricity prices.
EIA forecasts electric generation fueled by natural gas will drop from 38% of generation to 36% in 2023. Coal-fired generation will drop from 23% to 19% in 2023.
EIA noted growing generation from renewable sources limits growth in natural gas-fired generation, and coal’s generation share declines because of the expected retirement of some coal-fired capacity.
Increases in U.S. electricity generation in the EIA forecast come almost entirely from solar and wind.