U.S. households face a wide gap in winter heating costs

U.S. households can expect different winter heating bills depending on the fuel they use, the Energy Information Administration (EIA) said in its winter fuels outlook released on Tuesday. The agency, which is the Energy Department’s main analytical office, projects lower spending for many natural gas and propane users but higher costs for homes that rely on heating oil or electricity.

“We expect households using natural gas and propane as the primary heating fuel – collectively, about half of all U.S. households – will have lower energy expenditures this winter, primarily because of lower fuel costs,” the EIA wrote in the outlook.

National and regional projections

Across the country, the EIA projects that spending by households primarily heated with natural gas will fall about 9% compared with a year earlier. The agency said that all modeled weather scenarios show decreases, although regional patterns vary: the West is forecast to see a 7% increase in natural-gas spending, while the other regions are expected to experience declines in the 10%–15% range.

Propane-heated homes are forecast to spend roughly 3% less overall, with an uncertainty range that stretches from a 10% decrease to about an 8% increase. Regionally, the forecast calls for flat propane spending in the South, a 4% decline in the Midwest and a 15% decline in the Northeast.

By contrast, the EIA expects heating oil expenditures to rise sharply — about 21% nationally — with an uncertainty range from roughly 15% to 35% higher than last winter. Homes that use electricity as their main heating source are projected to see spending rise by about 4% overall, with single-digit increases implied by the uncertainty range.

The outlook gives regional detail for electric-heated homes as well: the West is projected to face a 9% increase from last winter, the South and Midwest a 3% rise each, and the Northeast a 3% decline, according to the EIA.

Drivers and uncertainty

The EIA tied the contrasting outlooks to fuel-price trends: lower fuel costs for natural gas and propane are expected to ease spending for households that use those fuels, while higher prices for electricity and heating oil would push up expenditures for those users. The agency also noted that its projections incorporate a range of weather scenarios and emphasize forecast uncertainty.

The EIA said its forecast assumes national average temperatures will be similar to last winter, but with regional differences: warmer-than-last-year conditions in the Northeast (after a relatively cold season last year) and much colder-than-last-year conditions in the West (after an unusually warm winter a year ago). The agency said the Midwest and South are expected to see temperatures similar to last year.

Adding to the uncertainty, the National Oceanic and Atmospheric Administration (NOAA) has “identified a strong El Niño pattern this winter, which could lead to large temperature variations from our forecast,” the EIA noted.

In short, the EIA’s outlook points to relief for many natural-gas and propane households but warns of higher bills for those using heating oil or electricity, with regional weather swings and the strength of El Niño able to shift outcomes from the baseline projection.