Lower winter heating bills predicted by EIA

The government agency EIA is out with a prediction that Americans will pay less on heating this winter compared to last winter.

The EIA government agency is out with a prediction that Americans will pay less on heating this winter compared to last winter.

Residential energy expenditures

The U.S. Energy Information Administration report stated that the forecast applies to U.S. households where natural gas is used for heating. There will also be a decline in expenses for homes that use heating oil.


The EIA said the decline is expected because of a cooler winter in the Northeast where heating oil is most used.

The Winter Fuels Outlook focuses on retail energy bills for the four most common U.S. heating fuels, and it includes our forecast for winter (November through March) residential energy expenditures. The forecast of expenditures by energy use reflects consumption across all residential energy uses, not just home heating.

Household energy expenditures depend, in part, on how much energy the household uses. Energy consumption in households is heavily influenced by weather; the milder the winter, the less energy the household consumes. The EIA expects a warmer-than-average winter this year with some variation by region. Its expectation is based on data from the National Oceanic and Atmospheric Administration (NOAA) 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.

Residential energy prices are another key determinant of household energy expenditures. This winter, the EIA expects that residential energy prices for all heating fuels will be at least somewhat lower than they were last winter.

Heating Oil and Propane Update

Data source: U.S. Energy Information Administration, Short-Term Energy Outlook and the Heating Oil and Propane Update

Wholesale natural gas prices are expected to be 14% 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.

Because natural gas is the most common fuel used to generate electricity in the United States, EIA experts expect that retail electricity prices will also be down slightly (2%) from last year, as the lower price that power plants pay for natural gas passes through to retail electricity rates.

Most U.S. homes that are heated primarily with heating oil are in the Northeast. Slightly lower retail heating oil prices are also expected this year. However, the agency said it expects the Northeast to be cooler compared with last winter, increasing household consumption of heating oil. It forecasts 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%.

A 6% drop in U.S. propane prices is also expected, compared with last winter because the combination of increased U.S. propane production and record propane inventories has placed downward pressure on propane prices. Lower prices result in relatively flat expected expenditures for propane.

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