Heating oil customers will spend 2 percent less to heat their homes this winter while natural gas customers will spend 13 percent more, according to the Winter Fuels Outlook published this week by the U.S. Energy Information Administration (EIA).
These statistics reflect the realities of the energy marketplace. While natural gas advocates contend that today’s natural gas prices are here to stay, critics say natural gas prices will continue to rise as demand increases. The natural gas industry is already seeing increasing demand for power generation, gas heat, manufacturing and transportation, and the federal government has authorized natural gas exports that will commence in the next few years.
EIA calculates that natural gas heat will cost 13 percent more this winter if the base case weather forecast is accurate. Forecast temperatures are close to last winter with the Northeast about 3 percent colder and the West 3 percent warmer, according to EIA. If the weather is 10 percent warmer than forecast, natural gas heat will cost only 3 percent more than last winter, but if it is 10 percent colder, costs will rise by 25 percent.
Natural gas costs in the Northeast region are expected to rise more than national average, with the average gas-heated household facing an 18 percent cost increase, according to EIA. The region’s reliance on natural gas for electricity generation has increased from 30 percent to 52 percent over the last 11 years.
“Increased gas use for power generation has contributed to pipeline transportation constraints in the New England regional natural gas market,” EIA reports. “These pipeline constraints are more pronounced in winter months and contributed to extreme price spikes in spot natural gas and electricity prices in New England during January and February 2013.
For heating oil customers, a winter that is 10 percent warmer than the base forecast would lead to a 13 percent reduction in heating costs. A winter that is 10 percent colder than the forecast would cause a 9 percent increase in heating costs.
Heating costs are also expected to rise this winter for customers using electricity or propane.
To read the Winter Fuels Outlook, click here.