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EIA Sees Lower Heating Bills for Most Households This Winter

More than half of households in the United States will likely spend less on heating this winter than last winter, according to the Energy Information Administration.

In its most recent Winter Fuels Outlook, the EIA said it expects wholesale natural gas prices to be 14 percent lower this winter than last winter, driven by higher U.S. natural gas production and robust natural gas inventories, leading to 21% lower retail natural gas prices for households.

Households that heat with natural gas and those located in the West – regardless of the fuel they use -- account for more than half of all U.S. households, the EIA noted.

In addition, because natural gas is the most common fuel for generating electricity in the United States, the EIA said it expects retail electricity prices will also be down by about 2 percent from last year, as the lower price that power plants pay for natural gas passes through to retail electricity rates.

On the other hand, households in the Northeast, where heating oil is the primary heating fuel, will likely spend slightly more this winter than last winter because the increased heating demand due to a cooler winter in the Northeast is likely to offset lower heating oil prices, the EIA said.

The EIA expects slightly lower retail heating oil prices this winter, but also expects the Northeast to have a cooler winter compared with last winter, increasing household consumption of heating oil.

“We forecast the increase in consumption will outweigh the fall in prices for the average Northeast household, increasing energy expenditures this winter for households using heating oil by 8 percent,” the EIA said.

The EIA also said it expects 6 percent lower U.S. propane prices this winter compared with last winter because the combination of increased U.S. propane production and record propane inventories has placed downward pressure on prices.

Household energy consumption is heavily influenced by weather, the EIA said, adding that it expects a warmer than average winter this year with some regional variations. The EIA bases its expectations on data from the National Oceanic and Atmospheric Administration and the previous 30-year trend.

Because weather is a significant source of uncertainty about energy use, the Winter Fuels Outlook also includes two side cases that assume a warmer and a colder winter.

The EIA releases its Winter Fuels Outlook every October as part of its Short-Term Energy Outlook. The Winter Fuels Outlook focuses on retail energy bills for the four most common U.S. heating fuels and includes the agency’s forecast for winter residential energy expenditures, reflecting consumption across all residential energy uses, not just home heating.

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