Household Heating Expenditures Expected to Rise 54% Over Winter

Average expenditures for U.S. households heating primarily with propane, located mainly in the Midwest and Northeast, are expected to be 54% higher for the most recent winter compared to the previous heating season, reports the Energy Information Administration (EIA). At the same time, expenditures for homes using fueloil are forecast to be 7% higher; natural gas 10% higher; and electricity 5% higher.

EIA notes that persistently cold weather east of the Rocky Mountains drove up demand for all heating fuels, depleted inventories, and put upward pressure on prices. Propane prices experienced an especially high spike during several weeks in January and February. EIA’s estimates for winter heating expenditures are significantly higher than the pre-winter forecasts.

Between the beginning of October and the end of February, U.S. average heating degree days were 13% higher than the previous winter (indicating cold weather) and 10% above the 10-year average. The Northeast was 13% colder than the prior winter, the Midwest and South were both 19% colder, while the West was 5% warmer. The extreme weather had the greatest effect on households in the Midwest that primarily use propane, and on households in the Northeast that use fueloil.

    EIA’s estimate for winter energy expenditures for homes heating with propane in the Midwest is $2212, which is $759 higher than projected in October 2013. The estimate for average U.S. expenditures for homes using fueloil is $2243, $197 higher than forecast. However, in contrast to markets for propane and fueloil, where wholesale price movements are quickly reflected in retail prices, the retail electricity and natural gas rates paid by consumers who receive service through local distribution utilities do not immediately reflect price spikes in the spot market. In addition, the use of electricity for space heating is centered largely in the Southeast and West—areas of the country that did not experience the same levels of prolonged, extreme cold.