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EIA WINTER FUELS OUTLOOK
The Winter Fuels Outlook provides EIA ’ s expectations for U . S . residential energy consumption , prices , and expenditures for the upcoming winter as well as analysis of market conditions for the four most common U . S . residential space heating fuels : natural gas , electricity , propane , and heating oil . Following are excerpts dealing with heating oil and propane .
The data values and analysis below were published with the October 2024 edition of the Short-Term Energy Outlook on October 8 , 2024 .
Forecast summary We expect that most U . S . households will spend about the same or less on energy than they did last winter , depending on a household ’ s main space heating fuel and the region where they live . Generally , retail energy prices in our forecast are less than they were last winter , but temperatures across much of the country are set to be colder this year , meaning homes will use more energy for space heating . The combination of lower prices and colder weather results in relatively little change in expenditures .
The exception is the Midwest , where last winter was very mild . In that region , we expect a return to more normal temperatures that will outweigh the effect of lower energy prices and cause spending on heating fuels to rise by between 2 % and 11 %, depending on the energy source , in the coming winter .
Alternative weather assumptions produce a wider forecasted range of propane and heating oil expenditures compared with natural gas and electricity . In our base case , we expect spending by propane-heated homes will be similar to last winter . In our case with colder weather assumptions , those propane expenditures could be notably higher than last winter . Expenditures for households using heating oil are down by 5 % from last year in our forecast unless actual winter temperatures are colder than expected .
Fuel inventories are an important source of winter supply . More natural gas and propane are currently stored in U . S . inventories compared with their previous five-year ( 2019 – 2023 ) average going into this winter . These relatively high inventories have helped keep prices for those fuels below yearago levels . However , distillate fuel inventories , a category which includes heating oil , are slightly below their five-year average .
Many heating oil and propane users buy supplies ahead of the winter and refill as needed . When forecasting expenditures , our calculations do not account for fuel that consumers purchase ahead of its use or fuel that was contracted at prices set before the start of the winter . We assume households pay the prevailing retail price for heating oil and propane at the time they use it .
Heating oil
• U . S . heating oil consumption is highly concentrated in the Northeast .
• Expectations of lower heating oil prices lead to less expenditures despite colder weather .
• Inventories of heating oil in the Northeast and East Coast regions are greater than they were at this time last year .
Heating oil , a variation of distillate fuel oil or diesel , is the primary space heating fuel for 4 % of U . S . households . We expect these homes will spend about 5 % less on heating oil this winter than last . More than 80 % of the homes that use heating oil as their main heating fuel are in the Northeast .
Even though we publish heating oil consumption as a U . S . average , the lack of significant consumption outside of the Northeast means the U . S . average heating oil price is heavily weighted toward the Northeast and corresponds closely to the Northeast regional average price .
We estimate that U . S . households that use heating oil for space heating will consume an average of about 400 gallons of heating oil this winter , or 4 % more than last winter , but we expect heating oil prices will be lower this winter , averaging $ 3.50 / gal , down 9 % from last winter . At this price , homes that primarily heat with heating oil will spend an average of $ 1,410 this winter .
In our warmer case , we expect the average household using heating oil as their primary heating fuel will consume 2 % less heating oil than last winter and prices will be 10 % less than last winter , reducing expenditures 12 % from last winter . Conversely , in our colder case , we estimate per household consumption would be 13 % more than last winter , prices 7 % lower , and expenditures 5 % higher .
Lower heating oil prices reflect lower crude oil prices and significantly lower refinery margins for diesel and heating oil . l FON
Weather assumptions We assume this winter will be colder than the last winter across much of the country , especially in the Midwest . Our assumption is that temperatures this winter will be closer to average following a very mild winter last year .
Wholesale price changes for heating oil and propane are passed to consumers quickly because rates in those markets are not regulated as they are for natural gas and electricity . We generally estimate that changes in wholesale fuel prices become fully reflected in retail prices over a period of four to six weeks . www . fueloilnews . com | FUEL OIL NEWS | NOVEMBER 2024 11