U.S. News

U.S. heating costs forecast to be higher this winter: EIA

(Reuters) - Most U.S. households can expect higher heating expenditures this winter than in the previous two years, according to the government’s Winter Fuels Outlook released on Wednesday.

The U.S. Energy Information Agency (EIA) said in a report that the higher expected heating expenditures between October and March are the result of more demand for heating because of colder weather and, to a lesser extent, higher fuel prices.

EIA said it based its heating demand projections on the most recent temperature forecasts from the National Oceanic and Atmospheric Administration (NOAA).

NOAA forecast that the coming winter would be 13 percent colder than last winter and closer to the average of the previous 10 years.

EIA projected the average household will pay about $644 to heat a home this winter with natural gas, $980 with electricity, $1,462 with heating oil and $1,661 with propane.

In all cases, those costs are up from the prior two winters.

Natural gas is the most common heating fuel in every region except the South, where electric heating is used more. The Northeast uses more heating oil than other regions, while propane is more prevalent in the Midwest.

EIA expects that heating oil margins will average 41 cents a gallon, up 14 cents from last winter.

The better margins are a result of lower distillate fuel inventory levels, strong demand for U.S. distillate exports, and the expectation of close-to-normal temperatures, EIA said.

Distillate fuel inventories, which include heating oil, totaled 35.5 million barrels on Sept. 29 in the Northeast, 16.8 million barrels lower than at the same time last year, and 1.9 million barrels lower than the previous five-year average for this time of year, EIA noted.

Distillate inventories unexpectedly fell over the summer and dropped even further heading into this winter because of refinery outages along the U.S. Gulf Coast after Hurricane Harvey.

“Unless severely cold temperatures in the Northeast coincide with severely cold temperatures in Europe, ample distillate supplies should be available to meet demand, but localized supply issues are possible,” EIA said.

Reporting by Scott DiSavino; Editing by Paul Simao