Lower fuel prices to lead to lower winter heating bills for homes using natural gas, propane
Energize Weekly, November 1, 2023
Winter heating bills will be lower than last year for homes using natural gas and propane but will be up for those relying on heating oil, according to forecasts by the U.S. Energy Information Administration (EIA).
The EIA is projecting a colder winter for the 2023-2024 heating season compared to last winter, although it will be warmer than the 30-year winter average. This will lead to households using more fuel, but that will be offset by lower prices.
The biggest savings will come for consumers using natural gas for heating primarily due to much lower natural gas prices.
At the Henry Hub, a major gas distribution point, spot prices are expected to be 45 percent below last year with an average price of $3.12 for a thousand cubic feet (Mcf). In 2022, the Henry Hub spot average price was 65 percent higher than it had been in 2021.
That will translate into lower heating bills for the 46 percent of U.S. households that use natural gas for home heating during the November through March heating season.
“Last winter, residential retail natural gas prices were higher than they had been for the previous 10 winters… averaging $14.85 Mcf,” the EIA said.
The average bill for U.S. homes heated by natural gas is projected to drop 21 percent to $601 for the heating season. An even more pronounced decline is projected for the West where the seasonal heating bill is set to drop 30 percent to $590 from $843.
The smallest regional decline will come in the South with a 15 percent drop to an average seasonal heating bill of $494. Northeast heating costs will be down 17 percent to $761, and those in the Midwest will be down 25 percent to $581.
The decline in heating costs for the handful of homes that use propose will be a modest 3 percent to an average of $1,343.
Propane prices at the Mont Belvieu distribution hub in Texas fell below 70 cents per gallon in late October, a decrease of more than 50 percent from the eight-year high of $1.60 hit in February 2022, as inventories reached near-record levels.
“About 5 percent of all U.S. households use propane as their primary space heating fuel,” the EIA said. “At least 14 percent of homes in Vermont, New Hampshire, South Dakota, North Dakota, and Montana use propane as their primary heating fuel.”
Regionally, the EIA said it expects homes in the Northeast to spend about the same as they did last winter, while Midwestern households see an 11 percent cut and homes in the South spend about 6 percent more.
Only about 4 percent of U.S. homes – located in the Northeast for the most part – rely primarily on heating oil and according to EIA projections, they will spend an average of $1,851 this winter, up 8 percent from last winter.
Like other fuels, the price of heating oil is projected to drop, although only by 2 percent to $4.20 a gallon, and that will not be enough to offset the projected increase in household consumption, by more than 40 gallons, due to the colder winter.
