Heating oil bills to jump 21% to $2,115 this winter, while natural gas households save 9%
• Finance
This heating season, the US Energy Information Administration (EIA) expects natural gas and electric heating bills to diverge. On the one hand, households with natural gas heating will spend about $640 on gas between November and March, down 9% from last year. On the other hand, households that heat with electricity will spend about $1,196 on electricity, 4% more compared to the previous heating season. Natural gas is used for heating 45% of US homes; electricity, 43%. Combined, they cover nearly nine in ten households. Heating oil bills are expected to rise 21%, to $2,115.
Key takeaways
- Natural gas, electricity, and oil are used for heating 45%, 43%, and 3% of US households, respectively.
- This heating season, the bills for each household’s main heating fuel are expected to be: $2,115 (+21%) for heating oil, $1,246 (-3%) for propane, $1,196 (+4%) for electricity, and $640 (-9%) for natural gas.
- The gap between oil- and gas-based heating is expected to increase by roughly $430, to $1,475.
Regional differences
Natural gas bills are projected to fall most in the South, down to about $511 (-15%). The West, on the other hand, can expect to see the biggest rise in electricity bills—up 9% to $1,151— and it’s the only region where gas bills will rise (up to around $590, +7%). According to the EIA, the winter in the West will be 25% colder than last year in terms of heating degree days.
Around 4.1 million US homes use oil for heating—it’s the most expensive source, and four in five of them are in the Northeast. This winter, households using this source for heating will spend around 21% more than last year. The bills will come up to approximately $2,115. But it could have been worse—the winter in the Northeast is expected to be milder this year.
US households heating with oil face the steepest projected cost increase.
Why are the prices changing?
The prices of natural gas and propane are lower than last year, but in the case of gas, the fall is partly offset by the colder winter expected in the West, where gas bills will rise. Residential electricity prices are about 3% higher than last year, and consumption has increased slightly overall.
Households using oil for heating are expected to pay more because of a general increase in crude oil and distillate prices. Moreover, global oil refining has slowed down, and US inventories are low.
Year-over-year math
For comparison, last heating season, oil-heated households spent about $1,745 on heating oil, while gas-heated ones spent about $702 on gas. Therefore, the gap between the two was roughly $1,043. This year, the gap is widening by $430, to about $1,475. Oil-heated households will spend about 3.3 times as much on fuel as gas-heated ones.
Therefore, this year, oil-heated households will spend about $370 more. With 4.1 million oil-heated homes, that’s about $1.5 billion extra in oil heating bills nationwide. Other households will spend $46 more for electricity, $41 less for propane, and $62 less for natural gas.
If this winter turns out to be 10% colder than the EIA expects, natural gas bills will be about $45 higher ($685 in total), and electricity bills for electrically heated homes will come to around $1,243, or $47 more.
Methodology
The EIA forecasts refer to households already using a given type of fuel as their main heating source. The total fuel costs are not limited to space heating—they include water heating and, for electricity, appliances, electronics, and lighting. The forecasted costs assume national average temperatures similar to last winter, with regional differences. All prices are nominal, and propane prices exclude taxes. The EIA will update these forecasts in its November Short-Term Energy Outlook.
Sources
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