EIA: Home Heating Costs to Increase Slightly This Winter

October 20, 2010

A warmer heating season this year will somewhat offset increased costs for heating fuels, causing most U.S. households to experience only a 3% increase in home heating costs, according to DOE's Energy Information Administration (EIA). The EIA expects the lower 48 states to be 3% warmer than last year during the October-March winter heating season, although the projections vary by region. For instance, the Northeast is expected to experience a colder heating season than last year, resulting in a 5% increase in energy consumption for heating. The region is also the dominant user of fuel oil for home heating, and price increases for the heating fuel will drive up the average cost of home heating in the region by 13%, or about $259 on average. Households using electricity for heating are on the opposite end of the scale, as an expected decrease in both prices and consumption will yield a 2% savings in home heating costs relative to last year. The majority of U.S. households falls between these extremes, with homes heated with natural gas experiencing a 4% increase in heating costs, while those using propane will spend an average of 8% more this winter. See the EIA press release.

The EIA's "Short-Term Energy and Winter Fuels Outlook," released on October 13, projects an average crude oil price of about $80 per barrel this winter, up by $2.50 per barrel over last winter. The EIA forecasts crude oil prices rising gradually to $85 per barrel by the fourth quarter of 2011 as U.S. and global economic conditions improve. Spot prices for natural gas are also expected to increase, rising from $3.95 per million Btu in 2009 to $4.47 this year and $4.58 in 2011. And although the U.S. residential retail price of electricity was down nearly 1% in the first half of this year, relative to the first half of 2009, the year-to-year electricity prices are expected to increase by 1.5% for the second half of this year. In 2011, electricity prices are expected to increase by another 1.4%. Renewable generation is projected to increase by 13% in 2011, and along with a 1.4% increase in nuclear power generation, that will result in declines in coal and natural gas generation of 2% and 1.2%, respectively. So even though U.S. carbon dioxide emissions from the burning of fossil fuels are expected to increase by 3.9% in 2010, they are expected to remain essentially unchanged in 2011. See the EIA's "Short-Term Energy and Winter Fuels Outlook."