Released October 15, 2024 | SUGAR LAND
en
Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)--Barring unforeseen winter temperature anomalies, the U.S. Energy Information Administration (EIA) expects Americans' winter heating fuel use and costs to be about the same this winter as last, according to EIA figures presented in a webinar on October 9.
Presenter Joe DeCarolis, the agency's administrator, noted that four fuels account for 96% of U.S. heating fuel use: natural gas (45%), electricity (43%), propane (5%, mostly in northern states) and heating oil (3%, almost exclusively in the Northeast). Electricity is dominant in the south, he said, where winters are warm enough to make heat pumps more efficient. There is no region where propane or heating oil are dominant, as natural gas and electricity lead everywhere.
The EIA put forth three weather scenarios for its predictions: one for a typical winter, and one each for a 10% colder and 10% warmer season. For propane and heating oil, which are less price-regulated than natural gas or electricity, a colder winter could have the double effect of raising demand and, therefore, increasing prices. For regulated utilities that deliver gas or electricity, wholesale feedstock prices are less readily passed along to consumers.
Electricity Holds Steady
Prices and usage for this form of energy are expected to be about the same as last winter, assuming average weather. "We're seeing flat consumption" for space heating. Electricity is unique among all heating fuels because it is also used for most other household energy requirements. The EIA's figures separate out its use for space heating from everything else.
In the 10% colder scenario, the EIA adds $6-10 for electricity depending on the region. For the U.S. average, it expects a total of $1,050 per household for heating with electricity, up by 2% from last year. It would be slightly more in the Midwest and Northeast, less in the South, and right at the average in the West.
Natural Gas Maintains Its Place
"Nationally we expect households to spend about $600 on natural gas this winter, which is roughly the same as last winter," DeCarolis said. On the supplied chart, it is 1% higher than the winter of 2023-24.
By region, DeCarolis noted that last winter was very mild in the Midwest, so that region's 2024-25 gas bills are expected to be an outlier on that prediction, up about 11%. The West and South regions' expenditures may be slightly down from last year.
For this fuel, prices are influenced by markets and storage levels. In the four regions, current levels heading into winter are at or slightly above the five-year average. By early next year, the EIA expects storage to drop down closer to the average. DeCarolis said, "These inventory drops will place upward pressure on natural gas prices into 2025."
Propane Storage Low, but Only a Cold Winter Would Cause Issues
This natural gas liquid is used primarily in the upper Midwest's sparsely populated farm and ranch lands, where last-mile delivery is more practical than gas lines, and weather is considered too cold for electric-powered heat pumps to be efficient. Because this fuel's consumer price is not regulated as a utility, DeCarolis pointed out that its retail prices more quickly reflect any demand increases caused by unusually cold weather.
For a normal winter, the EIA forecasts national average propane heating cost is $1,190. "Across all regions we expect propane prices will be lower than last winter, but those lower prices are offset by higher consumption" assuming this winter is not as warm as last.
Should this be a cold winter, prices per gallon would greatly increase quickly due to the above-stated difference in price regulation compared to electricity and natural gas.
Cost increases would be exacerbated by the fact that most propane surplus storage is in the Gulf Coast, making it costly to ship northward by truck or rail, should it be needed to meet demand.
Heating Oil Prices Down
Because heating oil is a distillate and is closely tied to diesel production, prices of this fuel are expected to be down by about 5% this winter. That's due to a drop in diesel demand globally, combined with expansions of refinery capacity. Those drops have reduced both retail prices and refining margins.
DeCarolis added that recent Middle East tensions have raised oil prices, which could affect heating oil this winter if those conditions remain in play.
He noted that distillate inventories are below the 5-year average in both the Gulf Coast and East Coast PADDs.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
Presenter Joe DeCarolis, the agency's administrator, noted that four fuels account for 96% of U.S. heating fuel use: natural gas (45%), electricity (43%), propane (5%, mostly in northern states) and heating oil (3%, almost exclusively in the Northeast). Electricity is dominant in the south, he said, where winters are warm enough to make heat pumps more efficient. There is no region where propane or heating oil are dominant, as natural gas and electricity lead everywhere.
The EIA put forth three weather scenarios for its predictions: one for a typical winter, and one each for a 10% colder and 10% warmer season. For propane and heating oil, which are less price-regulated than natural gas or electricity, a colder winter could have the double effect of raising demand and, therefore, increasing prices. For regulated utilities that deliver gas or electricity, wholesale feedstock prices are less readily passed along to consumers.
Electricity Holds Steady
Prices and usage for this form of energy are expected to be about the same as last winter, assuming average weather. "We're seeing flat consumption" for space heating. Electricity is unique among all heating fuels because it is also used for most other household energy requirements. The EIA's figures separate out its use for space heating from everything else.
In the 10% colder scenario, the EIA adds $6-10 for electricity depending on the region. For the U.S. average, it expects a total of $1,050 per household for heating with electricity, up by 2% from last year. It would be slightly more in the Midwest and Northeast, less in the South, and right at the average in the West.
Natural Gas Maintains Its Place
"Nationally we expect households to spend about $600 on natural gas this winter, which is roughly the same as last winter," DeCarolis said. On the supplied chart, it is 1% higher than the winter of 2023-24.
By region, DeCarolis noted that last winter was very mild in the Midwest, so that region's 2024-25 gas bills are expected to be an outlier on that prediction, up about 11%. The West and South regions' expenditures may be slightly down from last year.
For this fuel, prices are influenced by markets and storage levels. In the four regions, current levels heading into winter are at or slightly above the five-year average. By early next year, the EIA expects storage to drop down closer to the average. DeCarolis said, "These inventory drops will place upward pressure on natural gas prices into 2025."
Propane Storage Low, but Only a Cold Winter Would Cause Issues
This natural gas liquid is used primarily in the upper Midwest's sparsely populated farm and ranch lands, where last-mile delivery is more practical than gas lines, and weather is considered too cold for electric-powered heat pumps to be efficient. Because this fuel's consumer price is not regulated as a utility, DeCarolis pointed out that its retail prices more quickly reflect any demand increases caused by unusually cold weather.
For a normal winter, the EIA forecasts national average propane heating cost is $1,190. "Across all regions we expect propane prices will be lower than last winter, but those lower prices are offset by higher consumption" assuming this winter is not as warm as last.
Should this be a cold winter, prices per gallon would greatly increase quickly due to the above-stated difference in price regulation compared to electricity and natural gas.
Cost increases would be exacerbated by the fact that most propane surplus storage is in the Gulf Coast, making it costly to ship northward by truck or rail, should it be needed to meet demand.
Heating Oil Prices Down
Because heating oil is a distillate and is closely tied to diesel production, prices of this fuel are expected to be down by about 5% this winter. That's due to a drop in diesel demand globally, combined with expansions of refinery capacity. Those drops have reduced both retail prices and refining margins.
DeCarolis added that recent Middle East tensions have raised oil prices, which could affect heating oil this winter if those conditions remain in play.
He noted that distillate inventories are below the 5-year average in both the Gulf Coast and East Coast PADDs.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
