Winter Heating Costs Likely Higher than Last 2 Years

Most U.S. households can expect higher heating expenditures this winter—October 2017 through March 2018—than the last two winters, according to the Energy Information Administration’s (EIA) Winter Fuels Outlook. Higher expected winter heating expenditures are the result of both more heating demand because of relatively colder weather and, to a lesser extent, higher fuel prices.

EIA’s projections of heating demand are based on the most recent temperature forecasts from the National Oceanic and Atmospheric Administration (NOAA). NOAA’s forecast anticipates that winter weather will be 13% colder than last winter and closer to the average of the previous 10 winters. Because weather patterns present great uncertainty to winter energy forecasts, EIA’s Winter Fuels Outlook includes projections for 10% colder and 10% warmer scenarios. In the past 10 winters, actual temperatures have been more than 10% colder than NOAA’s September forecast once, and warmer than the forecast twice.

The average household winter heating fuel expenditures in the EIA forecast provide a broad guide to expected heating costs. Fuel expenditures for any house-hold also depend on the size and energy efficiency of the home and its heating equipment, indoor temperature preferences, and local weather conditions.

The choice of primary heating fuel varies considerably by region, resulting in regional differences in total expenditures. Natural gas is the most common space heating fuel in every region except the South, where electric heating is more prevalent. Fuel oil is much more common in the Northeast than in other regions, while propane is more common in the Midwest.

EIA notes that primary U.S. propane inventories are entering this heating season at levels lower than the five-year average for this time of year after beginning last winter, well above the five-year average level. U.S. propane stocks in the last week of September 2017 were at 78.0 MMbbl, which was 9% lower than the previous five-year average.

Inventories in the Midwest, the region most reliant on propane for heating and agricultural uses, ended September 4% lower than the five-year average. However, regional detail shows stocks across the northern Midwest at or above the five-year average. Propane production is forecast to be 7% higher this winter compared with last winter, while total propane consumption is expected to be 2% higher than last winter and net exports 4% lower.

(SOURCE: The Weekly Propane Newsletter, October 23, 2017)