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Federal Agency Predicts Lower Heating Costs This Winter

October 10, 2014—The Energy Information Administration (EIA) is predicting that households will spend less money to heat their homes this winter than they did last year. The agency cites predictions that the upcoming winter will be milder than the one experienced last year, which was 11 percent colder than the previous ten year national average.

The EIA projects that household expenditures could decrease by the following levels based on fuel type:

  • Propane: 27 percent
  • Heating oil: 15 percent
  • Natural gas: 5 percent
  • Electricity: 3 percent

Given this information, it's not surprising that energy vendors around the country are announcing that their customers may face lower bills than last year. In Indiana, the three major natural gas utilities are predicting that bills could be as much as $70 less per month during the winter. In New York, National Grid is projecting its electric customers might see a three to nine percent reduction in their bills, while natural gas customers might experience up to a 10 percent decrease.

In Maine, the Governor's Energy Office reported that heating oil prices are the lowest they've been in two years, with an average price of $3.32 per gallon compared to $3.53 at the same time a year ago. To fill a 275-gallon tank, that difference in price saves the customer $57.75.

"We never know where the market is going," said Jamie Py, president of the Maine Energy Marketers Association, which represents the state's oil dealers. "Our opinion has been that the market was being propped up by over-speculation, so maybe they are coming back down to where they should be. For consumers, it's great."

Similarly, Nebraska officials are predicting cheaper propane prices this heating season. Currently, the price per gallon sits at about $1.59 in the state. During the crisis ast year, the price climbed as high as $6 per gallon in some Midwest locations. Nebraska reports that inventories of propane are as high as they've been in two years, with a Kansas hub having three or four million barrels more on hand than it did last year. Nationally, the EIA reports a total propane inventory that is nearly 19 percent higher than at the same time in 2013. That supply is expected to keep prices stable, which will help homes in Nebraska and other Midwest states.

Despite the good news, some people are reminding the public that the projections are based on a comparison to last year.

"It doesn't take much imagination [to say this winter will be warmer than last]! Last year was one of the coldest winters we've had in quite some time," says Thomas Parish of the University of Wyoming's Atmospheric Science Department. "So I think from a climatological perspective, it is reasonable. But the question is, compared to average, what are we in for? And that's a little more difficult to determine."

That means that weather impacts usage, and more usage means higher bills. Most vendors are explaining that to customers. For example, Indiana utilities are warning customers that, if temperatures are colder than normal, usage amounts and bills could be higher than the current projections.

Sources: EIA, media reports