Heating costs to jump 15 percent this winter: government

WASHINGTON (Reuters) - U.S. household heating fuel costs will rise 15 percent this winter from last year, the government's top energy forecasting agency said on Tuesday, citing more expensive fuel and the likelihood of much colder weather than last winter.

Heating oil and natural gas customers face the steepest price jumps, although double-digit percentage increases also are in store for users of propane and electricity, the Energy Information Administration (EIA) said in its latest winter forecast.

The cost to heat a U.S. home this winter will average $1,137, up $151 from last year, the EIA said. Heating oil bills for the October-through-March heating season will be up $449, or 23 percent, at $2,388. The retail price for heating oil should average $3.89 a gallon, up from $3.31 last winter.

"The projected increase is consistent with higher crude oil prices and projections of lower distillate inventories than last year going into the heating season," the Energy Department's forecasting arm said.

Officials said the winter heating cost estimate would have been much higher three months ago, when crude prices hit a record $147 a barrel. Oil now trades around $90 a barrel.

"I do think that as challenging as the times are, 15 percent is different than 40 percent, which is what we were looking at a short while ago. The reduction in the value of a barrel of oil is being directly translated into savings in heating oil," U.S. Energy Secretary Sam Bodman said.

Households using natural gas will see costs jump 18 percent, or $155, to $1,010, the agency said.

Natural gas prices have tumbled from earlier this year, but utilities must use gas inventories this winter to help meet demand that built up over the summer with very expensive gas, noted Howard Gruenspecht, the EIA's acting administrator.

Propane users will see their winter bills rise 11 percent, or about $188, to $1,861 and the nearly one-third of U.S. households that rely on electricity for heat will pay 10 percent more, or $89, at $947 for the season.

There also will be more government money this winter to help the needy pay utility bills. Congress doubled funding for the Low Income Home Energy Assistance Program, known as LIHEAP, to $5.1 billion to help poor families and senior citizens cover their heating costs.

As a result, the number of families that can get assistance under the federal program will rise from 5.8 million to 7.8 million. The level of heating costs that will be covered should average 50 percent this winter, up from 36 percent last year.

Gasoline costs, in comparison, are headed lower.

The national price for gasoline fell this week below $3.50 a gallon for the first time since mid April. The pump price could drop below $3 a gallon if crude oil costs stay around $90 a barrel for the next couple of months, Gruenspecht said.

(additional reporting by Christopher Doering; Editing by David Gregorio)