Government report: Consumers should expect lower winter heating costs

Tuesday, October 6, 2009 | 4:48 p.m. CDT

WASHINGTON — There's good news for people worried about winter heating bills.

People using natural gas this winter stand to save $105 compared with last year, and propane users will get even bigger savings, the government said. Households that use heating oil or electric heat also are expected to spend less during the heating season.

The Energy Information Administration said in its annual winter outlook Tuesday that lower fuel costs across the board and an expected milder winter will cut average heating costs for the upcoming season by 8 percent compared to last year — to about $960.

Households are expected to pay an average of $783, nearly 12 percent less than last winter, for natural gas, and $1,821 for heating oil, about 2 percent lower. People using electric heat will pay $933, a decline of 2 percent, and those using propane $1,667, or 14 percent less than last winter, the agency said.

The report cautioned that the projections reflect average costs and that expenditures for individual households will vary depending on local weather conditions, the size and energy efficiency of homes and the efficiency of heating equipment.

About half of all households depend on natural gas for heating, especially in the Midwest, where seven in 10 homes use the fuel. People in the Midwest also are expected to benefit from a milder winter compared to last year and see natural gas bills 15 percent lower than last year, the agency said.

The report said natural gas inventories are expected to be at a record high of more than 3.8 trillion cubic feet. Wholesale prices are well below last winter, and the EIA said prices are expected to remain low through October and then increase slightly as demand picks up.

The nearly 8 million households that use heating oil, primarily in the Northeast, can expect to save an average $40 to $60 compared to last winter. The agency said the price of residential heating oil in the Northeast is expected to average $2.64 a gallon, 2 cents less than last winter, but a significant drop from the average $3.31 a gallon that consumers paid two winters ago.

The biggest savings will be seen by users of propane: Households are expected to save an average of $280 this winter, a decline of 14 percent. Propane users in the Midwest are expected to save as much as 21 percent compared to last winter because of a combination of lower fuel prices and milder weather, the agency said.

The agency said nearly 52 percent of households use natural gas for heating, and another 35 percent rely on electricity. Nearly 7 percent use heating oil, and 5.6 percent rely on propane.

The report covers the winter period from October through March.

The EIA report also said:

  • Gasoline prices are expected to decline for the remainder of the year to a national average of $2.44 a gallon, and they are expected to increase next year to an average of $2.62 a gallon.
  • Crude oil prices are likely to average about $70 a barrel through the winter period, and global petroleum consumption is expected to increase by about 1.1 million barrels a day in 2010 as the economy strengthens.
  • U.S. crude oil production is expected to increase slightly next year to 5.34 million barrels a day, and emissions are expected to increase by 1.1 percent next year as the economy begins to recover, resulting in greater energy use.
  • Despite a projected 5.9 percent decline in carbon dioxide emissions this year compared to 2008, carbon dioxide pollution will again be on the rise next year. The EIA projects an increase of 1.1 percent in 2010 as the economy slowly recovers.

Carbon dioxide from burning fossil fuels is the leading greenhouse gas linked to climate change.

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